U.S. price pressures slowed in May, supporting the case for the FOMC today to pause their rate-hike campaign. The federal funds futures market is discounting only a 10% chance of a +25 bp FOMC rate hike today.
The U.S. May CPI eased to +4.0% y/y from +4.9% y/y in Apr, better than expectations of +4.1% y/y and the smallest increase in over two years. Also, May final-demand PPI eased to +1.1% y/y from +2.3% y/y in April, better than expectations of +1.5% y/y and the smallest increase in more than two years.
