US disinflation blip leaves traders with a broken heart [Video]

Yesterday’s inflation data from the US didn’t go smoothly down the market’s throat. Instead, the stronger-than-expected set of inflation data dashed hopes of seeing the Federal Reserve (Fed) cut rates anytime in the first half of this year.

Honestly, one can tell you if June or July would be a better time for the Fed to start cutting. The data will decide when the time comes. Yet the incoming data shows a surprising strength in the US economy. Atlanta Fed’s GDP estimate, for example, prints a 3.4% growth for the Q1 – far from a number that would push the Fed to start cutting rates. As such, the ‘blip’ in yesterday’s disinflation is more understandable than not given how strongly the US consumers spend.

As a result, US yields jumped, equities sold off, the US dollar rallied against its major peers and gold slipped below $2000 per ounce.

And the dollar’s strength was further backed by softer-than-expected inflation data in the UK and Switzerland.