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- 13 Apr 2023
- ICICIdirect Research
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US INFLATION EASES FOR NINTH CONSECUTIVE MONTH
News: Inflation continued to ebb and eased to its lowest level in nearly two years with YoY increase of 5.0% in March 2023 compared to 6.0% in February 2023. CPI on an MoM basis increased by 0.1% in January 2023 compared to 0.4% in February 2023. Core CPI, which excludes energy and food rose 5.6% in March from a year earlier, accelerating slightly from 5.5% in February. Core inflation stayed stubbornly high in part due to inflationary pressures from shelter prices. The index for shelter was the largest contributor on a monthly basis. Shelter prices rose 8.2% from year earlier accounting for over 60% of total increase in all items less food and energy. Services less energy services index rose 7.1% in March 2023 compared to 4.7% in the same month a year ago. After the data, huge volatility was witnessed across asset classes. Dollar Index closed near 101.53 mark and hovered near two month low. Bond yields pared much of their earlier gains. US 10 year treasury yields slipped to 3.39% and US two-year yields to 3.96% while stocks slipped lower
Views: The dollar is likely to show weakness in the coming days amid a decline in US treasury yields. Yields are expected to remain under pressure as cooler than expected headline inflation suggested the Fed may pause a rate hike sooner. US Dollar Index is facing strong resistance near 103.80 levels. As long as it sustains below this level it may slip further till 100/99.00 levels