The expected June rate hike by the Federal Reserve has cooled down! US stocks rise, and the US dollar falls 60 points.
After the release of the CPI report, short-term interest rate futures in the United States rose as traders increased their bets on the Fed's decision to pause rate hikes in June. Swap trading reduced the likelihood of a 25 basis point rate hike by the Fed in June.
On Wednesday, the US released its CPI report for April, which showed that inflation continued to slow down.
April CPI lower than expected
US April CPI was 4.9% YoY, lower than the expected 5% and the previous value of 5%.
US April core CPI was 5.5% YoY, in line with expectations and the previous value of 5.6%.
The energy index fell by 5.1%, while the food index rose by 7.7%.
The US April non-seasonally adjusted CPI recorded a year-on-year rate of 4.9%, which is the 10th consecutive decline and a new low since April 2021, lower than the market expectation of 5.0%.
The housing index was the main contributor to the monthly growth, while the used car and truck index and gasoline index also recorded growth. The energy index rose by 0.6% in April, while the food index remained unchanged.
The US April core CPI also rose by 0.4% on a monthly basis, with several indices such as housing and motor vehicle insurance also rising. However, this month's airfare and new car indices have declined.
US stock futures rise
After the CPI data was released, the futures of the three major US stock indexes rose in the short term.
After the CPI data was released, the yield spread between US 2-year/10-year Treasury bonds narrowed to -50 basis points.
After the CPI data was released, the yield curve of US 2-year/10-year Treasury bonds narrowed to -50 basis points.
After the US April CPI was released, the DXY index fell by nearly 60 points, now at 101.25, down 0.35% intraday.
After the CPI report was released, US short-term interest rate futures rose as traders increased their bets on the Fed's pause in raising interest rates in June.
The swap transaction reduced the possibility of the Fed raising interest rates by 25 basis points in June.