Morgan Stanley sees ‘spicier’ CPI as inflation week kicks off

Morgan Stanley's macro strategy team is forecasting a higher-than-expected Consumer Price Index (CPI) report for April, using the term "spicier" to describe their outlook. This inflation data release on May 14th marks the start of a week filled with economic indicators. The bank's prediction suggests the core CPI, which excludes volatile food and energy prices, could exceed the consensus estimate of a 0.3% monthly increase. A print above this level could significantly alter discussions around Federal Reserve interest rate cuts, potentially delaying them until late 2026 or later. The article draws parallels to past market reactions, noting that strong economic data or high inflation has historically led to a decrease in the attractiveness of risk assets like Bitcoin, as it reduces the likelihood of rate cuts. Conversely, softer inflation reports have seen positive impacts on cryptocurrencies. Investors are advised to monitor shelter costs within the CPI report, as a core CPI of 0.4% or higher would signal a notable acceleration in inflation. For crypto traders, the period immediately following the CPI release is expected to be volatile, with potential for sharp price movements and liquidation of leveraged positions. Future inflation data, including the Producer Price Index (PPI) and Personal Consumption Expenditures (PCE) index, will be crucial in confirming or refuting the CPI signal, with consistently high readings across all measures being more bearish for risk assets.

(Source：Crypto Briefing)