On Friday we had further encouraging data on inflation from the US:
- US May core PCE +0.1% vs 0.1% expected
HSBS, though, in their most recent 'global outlook' note are more circumspect:
- We still expect the pace of improvement in inflation from here to be only gradual and uneven given the ongoing stickiness in service sector inflation and the fact the ‘easier’ supply-driven improvements from energy prices and global supply chains that were so critical to collapsing goods price inflation have now run their course
- There are some signs of discounting now in the US but inflation is set to rise in places in the coming months given not just base effects but the recent strength in an array of commodity prices, from metals to foods, and ongoing shipping disruptions and the impact on freight costs”
We've been hearing over and again the 'last mile' in inflation is going to be hard going. This is along the lines of that familiar theme from HSBC. While on my time off I noted someone, I can't recall who, calling for a July Federal Reserve rate cut. Which seems unlikely given the most recent official remarks saying a string of better data is going to needed for a rate cut.
