SPTS - Soft U.S. Inflation Boosts Confidence In A Return To Target
2024-07-11 11:59:00 ET
Summary
- US CPI came in below expectations, which should increase the Fed’s confidence that inflation is on the path to sustainably reaching the 2% target.
- We are finally seeing housing inflation slow, with shelter coming in at 0.2% MoM rather than the 0.4% rate it has been trending at.
- September rate cut chances are rising and so too is our belief that the Fed will cut rates three times this year rather than by just the two cuts priced by markets.
Subdued inflation throughout
The June consumer price inflation report is surprisingly soft and should go some way to boosting the confidence of individual FOMC members that inflation is on the path to the Federal Reserve’s 2% target. Headline CPI fell 0.1% month-on-month rather than rising 0.1% as predicted, while core CPI came in at +0.1% MoM versus the +0.2% consensus forecast. Separately, initial jobless claims dipped 17k to 222k and continuing claims held stable, but it is the low CPI print that is dominating the market moves, with the 10Y Treasury yield dropping below 4.20% for the first time since late March....
Soft U.S. Inflation Boosts Confidence In A Return To Target