The April U.S. Consumer Price Index rose 3.8% year-over-year, topping the 3.7% consensus estimate. Core CPI, excluding food and energy, hit 2.8%, also above the 2.7% forecast. The data signals persistent inflation pressures, largely fueled by the ongoing U.S.-Israel-Iran conflict, which has disrupted oil shipments through the Strait of Hormuz and driven up energy costs.
Market expectations for a Federal Reserve rate cut by June 2026 remain low, with prediction markets pricing a 2.4% probability-up from 2% a day earlier. The likelihood of no rate cuts at all in 2026 stands at roughly 59%. Analysts are now watching for any shift in language from Fed Chair Jerome Powell and the FOMC, as well as further developments in the Middle East that could sustain upward pressure on prices.