“If CPI were to persist at a 0.3% M/M clip, headline inflation would track higher to 3/3.1% by year-end, we estimate. Even if the data miss on the downside today, the Fed will want to see a sustained period of low prices before cutting. Whatever the outcome, White House’s attacks on the Fed Chair are likely to continue. Rising US inflation swaps may reflect waning market confidence in the Fed’s ability to curb prices, something that should ultimately weigh on the USD and perhaps reinvigorate the bull run in gold (above $3425).”
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