The Day at a Glance | May 11 2022

The Top

*Inflation in the US surprised to the upside (8.3% vs 8.1%e.); underlying inflation increased more than expected during April (0.6% vs 0.4%e.).

*The rise in European rates could happen in July, weeks after the purchasing program comes to an end: Christine Lagarde, President of the ECB.

*Inflation in China increased more than expected (2.1% annual Apr vs 1.8%e.); inflation for producers also exceeded estimates (8% vs 7.8%e.).

*Hungary tightens its embargo on Russian oil in Europe.

*Disruptions occurred in the supply of gas from Russia to Europe through Ukraine; flows decreased in ¼.

Economic environment

Inflation in the US surprised to the upside. The most relevant figures in the US confirmed that inflation for consumers became more moderate (8.3% annual) during April, but the figure was still above estimates (8.1%e.). Month over month, inflation increased 0.3% (vs 0.2%e.), the lowest monthly inflationary rate since August, thanks to a decrease in prices in energy (-2.7% monthly), used vehicles (-0.4%) and clothing (-0.8%). However, the slowdown in general inflation was not as pronounced as expected and underlying inflation also surprised to the upside, by logging a 0.6% monthly increase (vs 6%e.). Commodity prices logged a 0.2% rise during the month; the largest monthly increase was recorded among new vehicles since December of 2021. Services also logged a 0.7% increase in prices (the largest increase in 6 months), with constant growth in housing prices (0.5%), medical services (0.5%) and the fastest monthly increase in transportation services in over 6 months (3.1%). The data confirms the need for the FED to carry out a fast monetary normalization process and contain inflation. Even though it`s already reached its peak, its descent could be slow and inflation could stabilize at high levels, which is why the central bank should continue carrying out decisive monetary policy decisions.