US core inflation hits 5.5% and it's the second lowest reading since November 2021

FXMAG.COM team asked Nour Hammoury to share his view on the US inflation data. Let's hear from Squared Financial Chief Market Analyst.

Nour Hammoury (Squared Financial): The US inflation data is sending a clear message to the Fed, and the market is reacting positively. Year-over-year core inflation has slowed down to 5.5% from 5.6%, marking the second lowest reading since November 2021. In addition, year-over-year CPI has slowed down to 4.9%, the lowest reading since April 2021. In short, there is no inflation pressure, and inflation is on the right track, although it may be sticky as expected.

The end of Fed rate hike cycle?

Nour Hammoury (Squared Financial): These outcomes confirm the end of the Federal Reserve's rate hike cycle, and the market believes that the Fed will cut rates at least once before the end of the year. Going forward, it's all about timing: how long will the Federal Reserve be able to hold the current Fed Fund Rate at the current levels? According to the bond market, not for long.
However, a trending market phase is highly possible in the coming weeks as we gather more evidence that the economy is cooling down, while inflation continues to ease further. The only concern right now is the debt ceiling. If there is no deal anytime soon, the US credit rating is at risk, which is something that no one would like to see.

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