Today’s CPI is far better than expected.


The not seasonally adjusted core CPI year-over-year and month-over-month both came in below expectations by 0.2%. More importantly,
the US Dollar Index fell (-0.5%).
US Treasury yields retreated (the 2-year yield fell by 10 basis points, at fresh multi-month lows).
Rate-cut (or at least no rate hike) expectations improved.
This CPI is actually “past data,” because June oil prices didn’t rise, and it doesn’t affect inflation. But US Treasuries, US stocks, and interest-rate futures suddenly stayed in sync, suggesting a “market-implied rate cut” outlook.
At the very least, this indicates that for July, the oil-price inflation factor has already been priced in. Wosh is right—zero tolerance for inflation is temporarily safe.
USIDX0.21%
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