A rebound to the upside | Weekly Extract

Week of May 9 to 13

Both the overall and core CPI surprised to the upside month-over-month by increasing 0.3% in April, after rising 1.2% in March. Over the past 12 months, the all-items index rose 8.3%.

There were notable increases that drove surprise upward, especially in the basic food basket with the food index up 0.9% on the month. The energy index declined in April after rising in recent months.

The increase in new vehicle prices was also notable: up 1.1 % in April after rising only 0.2 % in March and airfares in particular were up 18.6% in the month.

For the Fed, this justifies faster tightening this year. But before that there will be more inflation data. For the next meeting, in June, investors still see the Fed sticking to the 50 bp hike, rather than a 75 bp hike.

And continuing with the Fed's theme and plans, the Senate voted on Thursday to give Jerome Powell a second term as Fed chairman, this will allow for a consistent follow-through on attitude and strategies to address inflation.