Forget Peak Inflation, CPI Surprises toward the Upside

And to think the Fed kept on telling us last year that inflation was transitory.

Luckily, Astoria told our clients that inflation would remain structurally higher for a much longer period.

We wrote about the risks of a higher than expected print yesterday (click here).

This should be a catalyst for portfolios to maintain and perhaps increase their inflation hedges.

See below for further details.

May CPI (Consumer Price Index) readings that came out this morning were worse than expected:

In May, CPI rose 8.6% year over year, coming in above the 8.2% consensus estimate and topping April’s gain of 8.3%.

• Although CPI saw a downward annual print from March to April, May’s reading indicates an uptick and exceeded March’s print of 8.5%, establishing a new four-decade high.
• ​Gasoline prices are likely a large driver of the inflation print as they hit a record high during the month.
• Moreover, May CPI rose by 1% month over month, exceeding the expected 0.7% increase and above April’s 0.3% rise.
• Yesterday, the S&P 500 fell in anticipation of the release. Our opinion is that the S&P 500 may continue to struggle as today’s measure signifies that the Fed hasn’t been able to get inflation under control.
• Astoria advocates owning a globally diversified portfolio with multiple factors, alternatives, and inflation hedges to navigate the current environment. Please reach out if you would like to discuss our ETF managed portfolio solutions.

Exhibit 1
United States CPI

Best,
Nick Cerbone

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