The Fed’s lowered its projection to just one rate cut, but the markets swiftly disregarded the Fed’s … [+] hawkish forecast. (Photo by Chip Somodevilla/Getty Images)
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The S&P 500 hit another all-time high last week with a tailwind from better-than-expected consumer inflation (CPI) readings and lower bond yields. While the Federal Reserve sounded a more hawkish tone on the surface, there are reasons to doubt that this stance will continue much longer.
May CPI declined to 3.3% year-over-year, below consensus estimates and April’s 3.4%. Perhaps more importantly, the CPI supercore, which measures services inflation excluding housing, finally broke its relentless upward year-to-date trend. Wage pressures heavily influence Supercore CPI since services have a significant labor component, so it is welcome news that this inflation driver might be easing. Less importantly…
