Bags ready to celebrate
L’American inflation it fell in May to the lowest since March 2021, falling to 4% from 4.9% in April. A level well above the 2% target indicated by the Fed as a goal to be achieved in the medium term. However, the result is better than the consensus of analysts (4.1%). On a monthly basis, the consumer price index grew by 0.1 percentage points between April and May (in the previous month the increase was 0.4%). The data seems to confirm the possible ‘pause’ in the Fed’s rate hike campaign in June. The US central bank meets today and will communicate its monetary policy decisions tomorrow.
Core inflation falls less than expected
Core inflation (the so-called core index) rose in May by 0.4% on a monthly basis, in line with analysts’ expectations, and by 5.3% compared to the same period last year (in April it was 5.5%). In this case it is a slightly worse figure than the consensus (5.2%). Driving the core index – the one preferred by the Fed and excluding food and energy – are house prices and rents. American inflation is also starting to benefit from the slowdown in hotel and airline prices which, after the sharp rises in the post-pandemic and taking advantage of the desire for holidays, are starting to slow down with consumers tightening their belts.
The markets reacted with widespread increases. The Nasdaq opened up 0.8% and the S&P 500 up 0.4%.
Down the spread of government bonds
The possible stop by the Fed has also blocked government bond yields which are falling after the data that records a drop in inflation in the United States and in view of the next central bank decisions scheduled during the week. The spread between Btp and Bund drops to 164 points, with a drop of 2 basis points compared to the start and the lowest since March 2022. The yield on the Italian ten-year bond falls to 3.99%, with a drop of 5 basis points and levels of last March. The rate on the German Bund also fell to 2.35% (-3 basis points). The yields of the ‘peripheral’ countries are down with Spain at 3.3% (-2 points) and Greece at 3.63% (-4 points).