Wall Street seems to think yesterday's inflation data clears the way for the Fed to finally hit the brakes on the longest, sharpest series of rate hikes since the early 1980s, Matt writes.

Why it matters: What the Fed does with interest rates is arguably the alpha and omega for financial markets and the economy.

• Why were stocks down 19.4% last year? The Fed. Why did the bond market have one of the worst years on record? The Fed. Why did the housing market hit an air pocket? The Fed. You get the idea.

Driving the news: April's consumer price index data arrived about as economists had expected and provided some underlying reasons for optimism.

• The headline index was up 4.9% compared to last April. The core index — stripping out food and energy prices in order to see an underlying trend — was up 5.5%.

Yes, but: That still seems high!

• It's true that before COVID hit, both figures would have been considered unspeakably elevated. But they're down markedly from last year's highs, of 9.1% and 6.6%, respectively.

The market reaction: Bond prices jumped after the report hit, pushing yields lower. Stocks weaved between slightly positive and slightly negative.

Between the lines: For our money, the most interesting market move came in Fed funds futures, where traders speculate and hedge what the Fed will do with short-term rates.

• The market-based probability that the Fed keeps rates where they are — the Fed funds target between 5.00% and 5.25% — jumped from around 78% on Tuesday, to 95% after the inflation data arrived.

The bottom line: Though there are a few more data drops before the next rate decision on June 14, traders now think it's a near certainty that the Fed will leave rates alone.

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Analysts weighed in on the Fed's next move after the CPI release:

• Goldman Sachs: "Today’s report is supportive of our call for a pause at the June FOMC meeting."
• ING: "There are some signs that service sector price pressures are moderating so a June Fed pause looks likely."
• BNP Paribas: "We think the CPI data will bolster more moderate policymakers’ case to pause at the FOMC meeting on 14 June."
• Allianz Investment Management: "The in-line report should provide a runway for the Fed’s conditional-pause in rate hikes as further progress on bringing down inflation is evident."
• JPMorgan: "Today’s report probably also gives support to those on the FOMC who favor pausing at the June meeting (as we and consensus expect)."

Though the CPI print didn't show a re-acceleration in overall prices, there's still evidence of price pressures in certain parts of the economy, Matt writes.

Case in point: Used car and truck prices rose 4.4% in April compared to March.

• It was their biggest monthly jump since the inflation freakout of 2021.

Why it matters: The size of the price bump in used vehicles made it the second-largest individual driver of overall inflation in April.

Yes, but: They're still down 6.6% from last year's nosebleed levels.

• Plus, analysts already see signs those price increases will abate: A key leading indicator, the Manheim index that tracks wholesale used car prices, showed an 8% turndown in April prices at auction, compared to last year.
• Those lower prices should filter through to the retail prices at used vehicle lots for the next couple of months.

What they're saying: "The April spike in retail vehicle prices is unlikely to continue," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.

• "A further — smaller — increase in May can’t be ruled out, but we expect retail prices to fall sharply over the rest of this year."

Rejoice, lovers of affordable protein: Cheaper eggs are on the way, Matt writes.

Driving the news: The latest weekly egg report from the U.S. Department of Agriculture shows a sharp drop in the wholesale prices retailers are paying for eggs.

• They fell to roughly 78 cents per dozen in the first week of May, from a peak of about $5.30 at the end of last year.

Context: An outbreak of Avian influenza prompted the worst surge in egg prices since a similar outbreak hit in 1973.

Yes, but: As readers will hasten to say, they've not seen prices anywhere near that low. Remember these are wholesale prices, so you're still paying a markup.

• But egg prices are indeed falling, if slowly. In the CPI data out Wednesday, they were down 0.3% in April, compared to March, though they were still up 21% from last year.

The bottom line: Lower prices are likely on the way for consumers too, but it'll take time.