The Week Ahead: May 13 - 17

The week ahead is jampacked with economic indicator releases. The big ones are for inflation, retail sales, and production. They may be somewhat stagflationary on balance, showing inflation remains too high while economic growth is slowing. Nevertheless, we still expect to see inflation moderate with solid economic growth over the rest of this year. Here are a few observations on this week's key indicators:

(1) CPI. The Cleveland Fed's Inflation Nowcasting model shows headline and core CPI rose 0.41% and 0.31% m/m (3.50% and 3.65% y/y) last month (chart). Those numbers might spook the markets when released on Wednesday because they suggest that inflation remains stuck above the Fed's 2.0% target. The headline rate was boosted by a jump in gasoline prices (chart).