Core Insights - Despite better-than-expected CPI data in May, inflation pressures remain persistent, particularly in core goods and services, with wages for the lowest 25% income group falling below pre-pandemic levels [1][5] - The latest CPI data reflects a downward trend, but the underlying inflation dynamics, especially in services and core goods, indicate ongoing challenges [2][3] - The "super core" inflation, excluding housing services, is rising, which is a priority concern for the Federal Reserve [3] Inflation Dynamics - The overall CPI data shows minimal changes across its four components: food, energy, core goods, and services, with services continuing to dominate inflation trends [2] - The "ordinary person inflation index" tracked by Strategas indicates that essential living costs have consistently outpaced income growth during Biden's presidency, which could impact political stability [4] Wage Trends - Average wage growth remains slightly above 4%, but this stability is at the expense of the lowest income group, whose wages have declined below pre-pandemic levels [5] - The sharp rebound in oil prices adds uncertainty to the inflation outlook, with significant daily increases observed [5] Federal Reserve Policy Outlook - Market expectations for Federal Reserve policy remain largely unchanged, with anticipated rate cuts in September and December, despite ongoing inflation concerns [7] - The uncertainty surrounding trade policies and inflation suggests that the Federal Reserve may opt for a cautious approach, delaying rate cuts until later in the year [7]