JPMorgan Chase states that May's CPI may have already peaked, and the Federal Reserve may hold steady on policy, but the market still bets on rate hikes by the end of the year.

BlockBeats News, June 11 — The U.S. Consumer Price Index (CPI) for May increased by 4.2% year-over-year, reaching a new high in over three years, but JPMorgan Asset Management believes this data may have already approached the cyclical peak of this inflation cycle.

The firm’s Chief Global Strategist, David Kelly, stated that although inflation remains above the target range, the most likely decision at the upcoming Federal Reserve meeting is to "maintain interest rates," and to continue monitoring subsequent data changes.

Data shows that core CPI rose 0.2% month-over-month, below market expectations. Analysts point out that the decline in gasoline prices is seen as an important signal that inflationary pressures may ease, but the energy market remains affected by geopolitical conflicts, resulting in high volatility.

Regarding market expectations, traders have almost fully priced in the June meeting holding rates steady, but there are still disagreements about the policy path by the end of the year. The interest rate derivatives market shows that the probability of a rate hike before the end of the year has significantly increased, with some SOFR options even betting on earlier policy tightening.

The current market overall presents a split pattern of "fundamental expectations peaking" and "trading prices leaning hawkish," with the subsequent trend depending on the sustainability of energy prices and core inflation.