Low CPI

The May CPI data came in softer than expected.

• Headline CPI rose 2.4%, slightly below the market forecast of 2.5%.

• Core CPI (which excludes food and energy) came in at 2.8%, also under the expected 2.9%.

These small misses may not seem dramatic, but in the context of months of sticky inflation, they feel like a relief. Right after the report, traders ramped up bets that the Federal Reserve could start cutting rates as soon as September.

And honestly? I get the optimism. I feel it too.

Is Lower CPI Good News for Stocks?

Personally, I think lower CPI is generally positive for equities. It signals that inflation is easing, which increases the chances that the Fed might finally pivot away from tight monetary policy. Rate cuts, or even the anticipation of them, tend to boost market sentiment — especially for rate-sensitive sectors like real estate, and growth stocks.

But here’s where my optimism often wrestles with reality: the Fed has kept rates high for so long, and despite all the hopeful chatter after every slightly soft inflation print, actual cuts have been slower to materialize. It feels like every time I start to expect a meaningful shift, something delays it — a strong jobs report or a hawkish Fed speaker reminding markets not to get ahead of themselves.

Sometimes I wonder if I’m too quick to expect a rate cut, too eager for the pivot. I try to stay realistic, but it’s easy to get swept up in headlines like “Rate Cuts Coming?”

Are There Delays in the Data?

Also, there could be lags in how inflation responds to current economic conditions.

And let’s not forget the external risks. Tariff concerns are still in the background — especially with geopolitical tensions and trade friction. Those could feed into future inflation pressure, especially if supply chains get disrupted again or import prices rise.

More Data on the Way

It’s also worth remembering: CPI is just one piece of the puzzle. Coming up, we’ve got:

• Initial jobless claims – which will give us a sense of labor market softness

• Core PPI – which could show whether inflationary pressures are easing further up the supply chain

If jobless claims rise and PPI remains soft, that could reinforce the rate cut narrative. But if they surprise to the upside, the market might cool its enthusiasm again. It’s this constant push-pull between data points and Fed policy expectations that keeps everything so uncertain.

Final Thoughts

So yes — I welcome the lower CPI print. It’s a step in the right direction. But I’m trying to stay grounded. Markets are forward-looking, but the Fed tends to be cautious and data-dependent. And as much as I’d like to believe rate cuts are around the corner, I’ve been wrong before. Maybe we all have.

Still, one thing is clear: every data point matters now. The next few weeks could either build a stronger case for a September cut — or push it further into the distance.

Either way, I’ll be watching. Probably too closely.