The data was a shocker, the headline +1.3% m/m was well above already high expectations:
This via BNZ, I suspect this sort of response will be common across Asia today.
- annual increase to a fresh four decade high
- it wasn’t just caused by surging gasoline and food prices
- core measure increasing 0.7% m/m
- Inflation showed no sign of retreating, with goods inflation remaining strong and services inflation picking up across the board, a clear sign of an over-heated domestic economy.
- the Fed ... it will need to rein in inflation expectations and optics are everything. With the top of the Fed Funds range still only 1.75%, the market moved to price in a better than even chance of a 100bps hike later this month, followed by another super-sized move, closer to 75bps in September
The USD index is showing signs of a short term exhaustion.
