This is worth thinking about while awaiting the FOMC’s decision.
From Morgan Stanley:
We expect inflation data to “reverse to bearish surprises in April.” .. Several data series indicate a rapid deceleration in rents. .. Financial services inflation is linked to stock market returns, and the reversal of the S&P 500 in April will likely depress this volatile component of inflation indices. Continued deflation in China is expected to keep U.S. goods prices generally in deflation ..”
Also worth noting is the continued decline in oil prices. They are down 3.4% so far today, which is a good start for May inflation. This follows a slight decline in oil prices in April, although they were back-weighted during the month, and so won’t offer much help until May anyway.
This article was written by Adam Button at www.forexlive.com.
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