Today’s US CPI report was clearly hawkish on the surface, but looking closely, it is not all too demoralizing for those betting on continued risk-rallies and a path back to target. 

Clear path and further downside to OER according to Zillow and repeat rent. Though a modest surprise, components are not alarming albeit not helping Fed’s intentions.

June cuts aren’t off the table from today’s report, but more (rhetoric) timidness given strong economic data seems probable.

Chart 1: CPI report decomposed