US CPI Prep

On Tuesday the 13th May at 08:30 ET, the BLS is set to release the April Consumer Price Index report.
Here are some view on what to expect.

General Expectations
If CPI comes in higher than expected, we would expect to see weakness in US stocks, and strength in the dollar and government bond yields, as this would cause markets to pull back bets for further Fed interest rate cuts, as rates may need to stay higher for longer in this environment to make sure inflation is coming sustainably down to the Fed’s target.

If CPI came in lower than expected, we would expect strength in US stocks, and weakness in the dollar and government bond yields, as this would indicate that inflation is continuing to come down to the Fed’s target, which could increase the likelihood that the Fed can move forward with further interest rate cuts this year.

Commentary
Unicredit
We expect US headline CPI and core CPI both rose 0.3% MoM in April, leaving the year-on-year rates unchanged at 2.4% and 2.8%, respectively.
The large rise in tariffs is likely to start showing up in goods prices, particularly for new cars and imports from China such as electronics, sporting goods and apparel.
The inflationary impact of tariffs is likely to take a few months to build, partly because there was a huge frontloading of imports prior to the introduction of tariffs.
Housing inflation likely remained around 0.3% MoM, while non-housing core services inflation likely rebounded. Gasoline prices were down slightly in seasonally adjusted terms.

Wells Fargo
After an unexpected slide in March, the monthly change in the CPI in April is likely to rebound to its six-month trend. March’s tame reading could be traced back to weakness in the more dynamic components of the CPI; amid the flurry of federal government cost-cutting efforts and looming “Liberation Day” announcement of tariffs, concerns about the economy sent oil prices, airline fares and hotel prices sharply lower. Though uncertainty and recession fears bled into April, seasonal factors should be less favorable in tamping down price growth, and the reality of tariffs will likely have started to influence pricing decisions (especially in autos).

Still, despite the actualization of tariffs we do not expect April to be a light-switch moment in goods inflation. The pull-forward of imports, efforts not to alienate customers and general confusion over policy changes are likely to result in a more incremental strengthening in prices. We have penciled in a 0.24% increase in core goods prices for April but expect the monthly pace to be double that by the summer if current trade policy remains in place.

Overall, we look for the headline CPI to rise 0.2% in April, leading the year-ago rate to dip to a four-year low of 2.3%. We would not be shocked to see a 0.3% rise if some components bounce back more than expected. Excluding food and energy, we forecast the core CPI to rise 0.25%, keeping the annual rate unchanged at 2.8%.

Nomura
Core CPI inflation likely accelerated to 0.3% MoM in April from 0.057% in March.
We expect a rebound in core goods prices in April following an unexpected decline in March, but the impact of tariffs likely remained limited. Inflation of rent-related components likely moderated after having accelerated temporarily in March.
Supercore CPI inflation appears to have rebounded in April as certain volatile components stopped falling. Our forecast for April core PCE inflation is +0.173% MoM, close to an annual rate of 2%.

Previous Release
On April 10th at 08:30 ET, the BLS released the March CPI print.
Headline YoY came in lower than expected at 2.4%, on estimates of 2.5%, and down from the prior 2.8%.
Headline MoM also cooled down to -0.1%, on expectations of 0.1%, and down from the prior of 0.2%.

For the Core reads, YoY ticked down to 2.8%, on expectations of 3%, and the prior 3.1%, while Core MoM dropped to 0.1%, on expectations of 0.3%, and the prior of 0.2%.

This larger than expected cooling US inflation during March caused strength in the US indices, and weakness in the dollar and government bond yields, as the markets repriced their expectations for Fed rate moves, increasing bets on further cuts this year.