#JulyCPIInLineAsInflationCools

July consumer prices went up 3.4% compared to year and the core number was 2.5%. Both numbers were what people expected. Stock futures and gold went up after the numbers came out. The data shows that inflation has gone down for two months in a row. The core number is still much higher than the Federal Reserve’s goal of 2% which is 2%. This is making people have opinions about what the meeting in September should do.

What the Numbers Show

An average result takes away the chance of a surprise that would have made people think about raising rates quickly. Two months of improvement suggest that prices are going down. However a core number of 2.5% means the last part of the journey to reach the target is still not done.

Market Reaction Right Now

The fact that the numbers were as. The prices kept going down made the market feel a little more confident. Stock futures went up. So did gold. This reaction makes sense because the market was ready for a number and then relaxed once the data came as expected.

What the Discussion in September Might Be

Because the core number is still above 2% the question about what to do with the policy is still not clear. Some people think that two months of improvement are enough to keep rates the same and wait for signs. Others believe that the gap to the goal is still big enough to consider raising rates especially if future numbers show that the recent drop is not real. This disagreement is clear in how people're positioned and in what they say after the numbers come out.

Looking at the Options

I see the July CPI as an slightly easier number that makes it less urgent to raise rates but it does not close the door completely. The trend of two months of cooling is real. The high core number is also real. What happens in September will depend on the numbers about jobs and prices and how the group decides to look at the progress and the gap to the goal.

Final Thoughts

July CPI was 3.4% and core was 2.5% as expected. Inflation has gone down for two months in a row stock futures and gold went up and the core number is still above the 2% goal. The market is not sure if they will keep rates the same in September or raise them one time. The numbers themselves do not mean that the market is ready for a lot of easing or that it is time, for a raise. The next numbers will decide which side of the discussion wins.

What is your opinion. Should they raise rates. Keep them the same in September? Tell us how you are positioned.

This is my view of the numbers that were reported and the reaction that day. It is not a prediction or advice.

‍#JulyCPI #Inflation #FedWatch