US CPI Prep (12th May)
On Tuesday, the 12th of May at 08:30 ET, the BLS releases the US CPI report for April.
Here are some views on what to expect.
General Expectations
Forecasts subject to change
YoY – Forecast: 3.7% | Prior: 3.3% | Range: 3.9% / 3.5%
MoM – Forecast: 0.6% | Prior: 0.9% | Range: 0.8% / 0.4%
Core YoY – Forecast: 2.7% | Prior: 2.6% | Range: 2.9% / 2.6%
Core MoM – Forecast: 0.3% | Prior: 0.2% | Range: 0.5% / 0.2%
What to Expect
US Stocks
A cooler April CPI print — particularly if headline inflation eases from the March spike — could support equities, especially rate-sensitive sectors like tech.
Another hot print, especially if core inflation also picks up, may weigh on stocks by tightening financial conditions.
US Dollar
Stronger inflation data would likely support the dollar, reinforcing expectations that the Fed will remain cautious.
A softer CPI print may pressure the dollar, as markets lean toward a more dovish policy outlook.
US Government Bond Yields
If inflation remains elevated, yields are likely to move higher, particularly at the front end, as rate cuts are pushed further out.
A softer reading — especially in core — would likely pull yields lower as markets price in easing.
Federal Reserve Policy
The key question is whether March was a one-off energy shock or the start of renewed inflation pressure.
If inflation — especially core services — stays firm, it supports a higher-for-longer stance
If inflation cools meaningfully, it strengthens the case for a more accommodative path later in the year
Commentary
Unicredit
April US CPI is expected to show another firm rise, with headline inflation forecast at 0.5% month-on-month and 3.6% year-on-year, up from 3.3%. The main driver is gasoline, with prices rising 12% on the month, or nearly 7% on a seasonally adjusted basis, adding around 0.2 percentage points to headline CPI.
Core inflation is also expected to firm after March’s softer 0.2% print, with a rebound to 0.3% or higher seen as more likely. Higher jet fuel costs and shortages are expected to lift airfares, while supply-chain disruption may also start pushing core goods prices higher. The broader point is that the indirect effects of higher energy prices are still in the early stages and likely to build further over time.
Bank of America
April CPI is expected to continue showing the effects of the Iran war. Headline CPI is forecast to rise 0.5% month-on-month, or 3.7% year-on-year, driven largely by a 4.3% monthly jump in energy prices. Core CPI is also expected to rise 0.3% on the month and 2.7% on the year, reflecting payback in rents after the shutdown and still-sticky non-housing services inflation.
The main takeaway is that inflation pressures remain firm, and the risks to both headline and core CPI appear skewed to the upside.
Previous Release
On April 10th, the BLS released the May CPI report.
US CPI YoY: 3.3% (Forecast 3.4%, Previous 2.4%)
US Core CPI YoY: 2.6% (Forecast 2.7%, Previous 2.5%)
US CPI MoM: 0.9% (Forecast 0.9%, Previous 0.3%)
US Core CPI MoM: 0.2% (Forecast 0.3%, Previous 0.2%)
The April CPI report was mixed, but the market read it as better than feared on the part that matters most for the Fed. Headline CPI came in at 3.3% year-on-year, just below the 3.4% forecast, while headline month-on-month was a very hot 0.9%, exactly in line. Core CPI was the more important surprise: core year-on-year printed 2.6% against 2.7% expected, and core month-on-month came in at 0.2% against 0.3% expected. So the headline was still strong, but the underlying inflation pulse looked a touch softer than feared.
The dollar dropped, S&P futures jumped, and gold rallied. The market initially had to process a report that still looked inflationary on the surface, but once traders got through the details, the softer core print seems to have taken over the narrative. In other words, this was not a clean dovish report, but it was dovish relative to expectations where it counted, because it reduced the risk of an even more hawkish Fed read-through.
