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Figure Heloc 
Prior +2.6%Core CPI +2.2% vs +2.2 y/y expectedPrior +2.3%Well, the headline reading is the highest since September 2023 and it reaffirms the impact of surging energy prices. When looking at core annual inflation, we’re still not seeing any spillovers yet as the reading there is softer than it was in March even.Looking at the breakdown, food price inflation was seen at 2.5% with energy price inflation rising the most on a yearly basis by 10.9%. Services inflation also continues to keep sticky at 3.0% even if down from 3.2% previously. At the balance, that is still keeping core prices above the 2% threshold and it’s still not quite ideal for the ECB even if the Middle East conflict were to not happen.But now, the picture has completely changed because of the US-Iran war. The prudent step by the ECB is to stay on the sidelines but they’re not in an enviable spot in making a choice as we look to June.Circling back to the report, the monthly estimates also reaffirm the jump in energy prices mostly with that being up 3.0%. Food price inflation was only up 0.5% on the month with services inflation up 1.1% in April.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
Core CPI’s uptick to 2.6% signals potential volatility ahead for traders. With the headline inflation hitting its highest since September 2023, the market’s focus is likely to shift toward energy prices and their ripple effects on consumer spending. While core inflation remains stable at 2.2%, the divergence suggests that traders should brace for possible shifts in monetary policy. If energy prices continue to rise, we could see a more aggressive stance from the Fed, impacting both equities and commodities. Keep an eye on key levels in the energy sector, as a breakout could lead to broader market implications. The flip side is that if core inflation remains contained, it might give the Fed room to maintain a more dovish approach, which could support risk assets. Watch for any significant moves in the energy market, as they could dictate the next steps for both the forex and crypto markets, particularly in pairs sensitive to inflation data. Immediate attention should be on the upcoming Fed meetings and any statements regarding inflation expectations.
📮 Takeaway
Monitor energy prices closely; a breakout could trigger significant market shifts, especially in equities and forex, impacting trading strategies.
