Moving in the Right Direction

Inflation continues to moderate as expected, with headline CPI coming in unchanged MoM and up 3.3% YoY versus 3.4% in April.  Core CPI as up 0.2% MoM and 3.4% YoY versus 3.6% in April.

Energy and shelter continue to drive the data, with energy diving 2% MoM (up 3.7% YoY) and shelter up another 0.4% MoM (up 5.4% YoY.) Services in general were up 5% YoY.

Bottom line, there was nothing in the data to dissuade the Fed from a September rate cut which, judging from the FOMC presser, is exactly what they will likely do.

Stocks reacted positively and remain on track with our forecast.

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