CPI Data Analysis: Inflation Trend and Immediate USD Impact

Yesterday's CPI release came in at 3.4% YoY (Core CPI: 3.6%) — both above consensus. Market reaction was immediate and significant. **Price movements within 10 minutes of release:** • EUR/USD: -65 pips (from 1.0840 to 1.0775) • USD/JPY: +80 pips (from 154.20 to 155.00) • Gold: -$28 (from $2,368 to $2,340) • S&P 500 futures: -1.1% **What the data means:** Inflation is proving sticky above the Fed's 2% target. The "last mile" of disinflation from 3.5% to 2.0% is proving harder than the drop from 9% to 3.5%. The market is now pushing out first Fed cut expectations from June to September. **Key components to watch next month:** • Shelter inflation (still elevated at +5.5% YoY — the main problem) • Energy prices (volatile, but trending flat-to-down) • Services ex-shelter (Fed's preferred measure of underlying inflation) The shelter component alone is adding ~1.5% to headline CPI. How are you trading the post-CPI environment this week?