April's Consumer Price Index (CPI) data was released on Wednesday, falling in line with expectations with a 3.4% year-over-year rise. Core CPI also matched estimates year over year, signaling inflation's potential easing.
EY Chief Economist Gregory Daco and Academy Securities Head of Macro Strategy Peter Tchir join The Morning Brief to discuss the CPI data and the impact it may have on the overall market.
Daco suggests that a disinflation trend is picking up: "I think this recent retail sales report, while not alarming, does show that consumers are exercising a little bit more scrutiny. That's generally disinflationary. I think that disinflation momentum will continue or probably hit an inflation plateau over the summer and into the fall, but nonetheless, the underlying disinflationary forces are still very much in play."
Tchir claims that this report may signal the economy's entrance into "stagflation" territory: "The only last wrench to throw into this whole equation is you are starting to see some commodity inflation. Everyone's talking about copper (HG=F) and things like that. Do you start running into this risk of stagflation? It's not my base case. And I would have completely dismissed it about a month ago. I don't think we can dismiss it anymore, especially after we added some new tariffs yesterday. "
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