Tonight, the U.S. CPI for May drops, showing a year-over-year increase of 4.2% and a month-over-month rise of 0.5%, landing right in the sweet spot of market expectations.
At first glance, this seems 'bullish', but looking deeper into the structure, it's not all sunshine and rainbows.
The main driver of inflation is energy, skyrocketing with a year-over-year increase of 23.5%, largely due to the ongoing U.S.-Iran conflict pushing oil prices higher. What gives the market a bit of breathing room is the core CPI—after stripping out food and energy, the monthly increase is just 0.2%, falling below expectations, indicating that tariff pressures on general consumer goods are still under control.
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