Latest / Markets with Megan: A Quick Financial Markets Update / Inflation Falls Flat: CPI Surprises Wall Street | S2 E041 | 05-13-25

Transcript

Inflation Falls Flat: CPI Surprises Wall Street | S2 E041 | 05-13-25 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Good news is we're not seeing the tariff impact on the inflation data as of yet.
• 0:05
  Megan Horneman: It's Tuesday, May the 13th.
• 0:07
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• 0:09
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• 0:10
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• 0:13
  Megan Horneman: What we want to do today is dig a little deeper into the consumer price index data that we got today for the month of April.
• 0:20
  Megan Horneman: I think there was some expectation we'd start to see some of the tariff impacts show up in this data, but we did not.
• 0:27
  Megan Horneman: Let's dig into these details.
• 0:29
  Megan Horneman: When you look at the headline consumer price index, you see that it came in a slightly weaker than it had anticipated, at 0.2% versusa 0.3% expectation.
• 0:40
  Megan Horneman: At the core level it was the same thing, also 0.2 versus a 0.3% expectation when you look on a year-over-year basis.
• 0:49
  Megan Horneman: So this is also what the Fed's going to be looking at.
• 0:51
  Megan Horneman: Year-over-year at the headline level came in better than expected 2.3%.
• 0:56
  Megan Horneman: It's lower from 2.4% in March and better than the expectation of 2.4%.
• 1:03
  Megan Horneman: And there was really no big surprises in the core level either, because that is rising on a year-over-year basis at 2.8%.
• 1:10
  Megan Horneman: So let's go into what impacted this report today.
• 1:15
  Megan Horneman: So, first of all, energy prices were a big detractor from CPI, so that did help Oil.
• 1:20
  Megan Horneman: If you go back to the month of April, it was down about 20% for the month, so that was a big impact.
• 1:27
  Megan Horneman: When you look at the headline level, you saw gasoline down about a tenth, but on a year-over-year basis now down almost 12%.
• 1:35
  Megan Horneman: When you look at airline fares, this was another big reason the report was relatively tame.
• 1:41
  Megan Horneman: They've been negative in six out of the past eight months and what we saw on a year-over-year basis for the month of April, it was the biggest drop we've seen since 2023.
• 1:51
  Megan Horneman: Some of the areas that we thought would be impacted by tariffs think about automobiles, new vehicles on a month-over-month basis, prices were flat and actually used cars, the prices were negative at 5.10.
• 2:04
  Megan Horneman: So we're not seeing it really show up there.
• 2:05
  Megan Horneman: We're seeing some of the discretionary sectors whether it's apparel prices these were lower as well.
• 2:12
  Megan Horneman: This is keeping that index and that inflation data relatively tame.
• 2:17
  Megan Horneman: Now what does this mean going forward?
• 2:19
  Megan Horneman: Well, the markets liked this today from the bond perspective, so yields are lower and prices are higher.
• 2:24
  Megan Horneman: Equities are mixed here this morning and what we're seeing is that there's some individual names that are dragging the Dow Jones lower.
• 2:33
  Megan Horneman: But the S&P 500 has rallied on this and it's actually positive now year to date.
• 2:38
  Megan Horneman: The Dow Jones, even though it's having a weak day today, it's relatively flat.
• 2:44
  Megan Horneman: It's only down 0.14% year to date and the NASDAQ is trying to claw back some of those losses.
• 2:47
  Megan Horneman: On a year-to-date basis, it's now down only 1.5%.
• 2:52
  Megan Horneman: So what's the Fed going to do with this data?
• 2:54
  Megan Horneman: Well, they meet again in June, but the expectation for them to cut interest rates in June is relatively low.
• 3:00
  Megan Horneman: It's about 5% to 10% probability that they'll cut interest rates in June.
• 3:06
  Megan Horneman: It does pick up when you get into July.
• 3:09
  Megan Horneman: You're looking at a 30% and then you get over the 50% as we get into the second half of this year and to this we think the Fed's going to take this as welcome news.
• 3:18
  Megan Horneman: There was no major surprises, no big deflationary environment, so they can feel comfortable, sit back, absorb some more of the economic data that may get an impact from some of these tariffs.
• 3:29
  Megan Horneman: That's all we have today.
• 3:31
  Megan Horneman: There's a lot more data this week.
• 3:33
  Megan Horneman: On Thursday and Friday we'll have more from the consumer.
• 3:35
  Megan Horneman: We'll have more on the consumer confidence as well.
• 3:39
  Megan Horneman: So we'll be back to give you any more updates that we see.
• 3:41
  Megan Horneman: And again, if you want a history of our podcast, please, you can go to marketswithmegan.
• 3:45
  Megan Horneman: fm.
• 3:46
  Megan Horneman: Thank you.