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Traders in the currency and stock markets are paying particular attention to the Core Personal Expenditure Price Index, the Fed's preferred measure of inflation. This measure of inflation maintained its 2.8% y/y pace, contrary to expectations of a slowdown to 2.6%. The overall personal spending price index increased to 2.7% from 2.5% y/y.

The probability of a Fed rate cut in June fell to around 10% from 70% just a month ago. Expectations for the first cut in the new cycle have moved to September (with a 60% probability). At the same time, ideas that there may be no cut at all this year, or even an imminent increase, are gaining traction.

Traders in the currency and stock markets are paying particular attention to the Core Personal Expenditure Price Index, the Fed's preferred measure of inflation. This measure of inflation maintained its 2.8% y/y pace, contrary to expectations of a slowdown to 2.6%. The overall personal spending price index increased to 2.7% from 2.5% y/y.

The probability of a Fed rate cut in June fell to around 10% from 70% just a month ago. Expectations for the first cut in the new cycle have moved to September (with a 60% probability). At the same time, ideas that there may be no cut at all this year, or even an imminent increase, are gaining traction.


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