DBS Group Research’s Philip Wee reports that the New York Fed’s June Survey of Consumer Expectations showed 1-year inflation expectations rising to 3.7%, with 3-year expectations at 3.3% and 5-year unchanged at 3%. Despite higher oil and survey readings, futures pricing for a September Fed hike only nudged up, and consensus still sees a negative June CPI print.

Survey and CPI expectations

"The New York Fed’s June Survey of Consumer Expectations surprisingly reported that 1-year inflation expectations rose to 3.7% from 3.5% in May, the highest since September 2023."

"Consumers also expected inflation to rise to 3.3% from 3.1% over the next three years, but unchanged at 3% over the next five years."

"Prior to the report, New York Fed President John Williams expected headline inflation to decline alongside energy prices, confident that monetary policy was well positioned to achieve its dual mandate."

"While the futures market increased bets for a September Fed hike to 47.4% from Monday’s 39.4%, it remained below the 54.7% priced in a week ago."

"Consensus did not change its view for a negative 0.1% MoM reading in the June CPI inflation report next week."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)