The probability of the Fed raising interest rates in May has risen to 90%! Inflation is high and labor costs are rising.
The US labor cost index for the first quarter recorded a quarterly rate of 1.2%, reaching a new high since the third quarter of last year.
On Friday, the US released its "Fed's favorite" inflation data.
The US core PCE price index rose 4.6% YoY in March, with an expected increase of 4.5%, a previous value of 4.6%, and a revised value of 4.7%.
The US core PCE price index rose 0.3% MoM in March, with an expected increase of 0.3%, and a previous value of 0.3%.
US personal spending rose 0.1% MoM in March, with an expected decrease of -0.1%, a previous value of 0.2%, and a revised value of 0.1%.
The US labor cost index for Q1 recorded a quarterly increase of 1.2%, reaching a new high since Q3 last year, ending a three-quarter decline.
Rising labor costs
Traders remain confident in the Fed's rate hike in May
Traders in futures contracts linked to the Fed's policy rate strengthened their bets on the Fed's final rate hike in May on Friday.
After the report was released, short-term interest rate futures in the US fell slightly, reflecting a 90% chance of a 25 basis point rate hike in May. The current target range is 4.75%-5.00%.