Analyst: A negative month-over-month U.S. CPI print or a drop could ease market concerns about the Federal Reserve’s upcoming rate hikes

ME News, July 14 (UTC+8): Analyst Matthew Weller said whether inflation has already peaked is the question the market is most concerned about ahead of the release of the June CPI report. For the first time in three months, the Strait of Hormuz partially reopened in the second half of June, causing energy prices to drop sharply, while the lagged impact of the now-defunct “Liberation Day” tariffs under Trump may already have largely been digested by the market. Against this backdrop, traders and economists expect the overall inflation month-over-month rate to record its first negative reading in more than a year, which would ease market concerns about the Federal Reserve’s upcoming rate hikes.

The federal funds futures market is currently pricing a 35% probability of a rate hike by the Fed at this month’s meeting. In the prior month, under the leadership of the newly appointed Fed Chair Worsh, the meeting tone was relatively hawkish. While the hawkish outlook may be overly optimistic, an unexpected CPI report, along with Chair Worsh appearing before the Senate and House audiences on Tuesday and Wednesday, could still trigger abnormal swings in major markets amid uncertainty. (Jin10) (Source: ODAILY)