🇺🇸🔺 Supercore Inflation Remains Above Average: Cable FX Macro

• The April consumer prices report showed easing as the headline fell to 3.4% From the prior 3.5% Y/y, core CPI dipped to 3.6% from the prior 3.8%. The metrics came in line with the consensus forecast

• A measure of CPI core services less housing ticked at 4.9% Y/y, this was higher than the prior and the fastest pace since April 2023. Unsurprisingly, the market overreacted to the good news, but this isn't much of a victory for the Fed

• Analysts at J.P. Morgan have previously noted a downside skewness of USD sensitivity to CPI releases. The market seems to be biased to overreact to good inflation reports more than it is willing to turn bearish risk on hot inflation prints