Yesterday's CPI and Core CPI data were quite good, and the market's response has been positive. Today's PPI data isn't as closely watched as the CPI, but the PPI + CPI data can be used to estimate the Core PCE data, which is the most important data for the Federal Reserve. Powell often mentions that the 2% target refers to Core PCE reaching 2%.
Currently, market expectations are good, mostly below expectations. If market expectations can be met or fall short of expectations, it suggests that the Core PCE data is likely to be lower than the previous value, which is a good thing for the market.
However, positive estimates are limited. The current data does not include the newly adjusted +25% tariffs; it can only be said that if there were no tariffs, we could see U.S. inflation declining, but considering the tariff issue, the current data is not very relevant.
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