CPI induced a vol crush in VIX. Rate pause expect in June 😮

Yesterday's in-line CPI print caused the VIX to drop below 17%. Core CPI rose 0.41% MoM in April, slightly better than expected. Owners' equivalent rent increased by 0.54% MoM, while used car prices rose by 4.4% MoM. Lodging away from home and airfares declined, easing core services inflation. The SPX rallied +1.1%, but fell -1.5% from intraday highs. Investors saw the lack of upside surprise to the CPI, ease in shelter inflation, and modest growth in core services inflation as positives. However, skeptics pointed out core CPI remaining sticky at 5% YoY, a higher-than-expected jump in used car prices, and a steady rise in PCE core services ex-housing as sticking points for the Fed. Rates markets still price 40% of a rate cut, and the June FOMC expecting a pause.