U.S. CPI Tonight Could Beat Expectations, Traders Pricing in Aggressive Rate Hike as Early as September

BlockBeats News, June 10th: The US May inflation data will be released tonight at 8:30 pm. The changing US price level has become a core focus for the market and policymakers. As per the general expectations, the May Consumer Price Index (CPI) is expected to rise by 0.5% month-over-month, a level nearly three times the usual rate; the year-over-year growth rate is expected to increase from April's 3.8% to 4.2%, reaching the highest level since May 2023 and exceeding 4% for the first time in three years.

In recent days, bond traders have significantly increased bets on rate hikes, with some even suggesting that action could be taken as early as the September policy meeting. This expectation is particularly evident in options trading related to the Secured Overnight Financing Rate (SOFR). Following last Friday's US nonfarm payroll data, which was significantly higher than expected and led to a bond market sell-off, the market swiftly adjusted its positions, with a large number of options trades pointing to at least one rate hike this year, and some even speculating on the possibility of two hikes.

However, it is important to note that the data itself may be affected by statistical factors. Last year's government shutdown in the fall led to technical issues, making it difficult for a period of time to accurately reflect housing-related data (including rent and housing costs). As the statistical revisions are gradually completed, there is a possibility that the May data may be lower than expected, which could alleviate some of the market's anxiety.