The main macroeconomic data this week was inflation in the United States. Both headline and core data slowed in April 2023. According to the US Bureau of Labor Statistics, the CPI was 4.9% year-over-year in April, from 5.0% the prior month and slightly below the market forecast of 5.0%. Core CPI slowed to 5.5% in April 2023, in line with the market forecast and slightly down from 5.6% in March.
Despite aggressive interest rate hikes by the Federal Reserve, US consumer inflation remains above the Fed’s 2% target. Jobs report published last Friday by the US Bureau of Labor Statistics showed a still resilient labor market. In April, 253.000 nonfarm payrolls were added in the US economy, while unemployment rate went down to 3.4%. However, significant downward revisions were made to nonfarm payrolls from the previous two months, offsetting the better-than-expected gain in April.
Following the release of the data, US futures went up while Treasury yields dropped. The probability of a pause in the rate hikes at the next Fed meeting in June was also higher than the odds of another increase, according to the CME FedWatch Tool.