July US Inflation Data:
– Consumer Price Index (CPI):
– Year-on-Year (YoY): 2.9% (Expected: 3%)
– Month-on-Month (MoM): 0.2% (Expected: 0.2%)
– Core CPI (excluding food and energy):
– Year-on-Year (YoY): 3.2% (Expected: 3.2%)
– Month-on-Month (MoM): 0.2% (Expected: 0.2%)
ANALYST: The inflation numbers, with core and overall monthly figures matching expectations and the yearly figure slightly below forecasts, are mostly in line with market predictions.
TRADERS TRIMS FED RATE-CUT EXPECTATIONS AFTER CPI DATA
The yield on 10-year U.S. Treasury notes went up slightly after the CPI report, staying around 3.856%.
The yield on 2-year U.S. Treasury notes rose after the inflation data, now at 3.97%.
Key Points:
– July’s CPI inflation dropped to 2.9%, below the 3.0% estimate.
– Core CPI was 3.2%, matching expectations.
– This is the first time CPI has been below 3.0% since March 2021.
– A rate cut is expected next month, the first since 2020.
– With CPI and PPI decreasing, there’s a question about whether the Fed can prevent a recession.
While the Consumer Price Index (CPI) inflation rate for July stands at 2.9%, many essential items are experiencing much higher inflation rates:
1. Car Insurance: 18.6%
2. Transportation: 8.8%
3. Hospital Services: 6.1%
4. Homeowner Costs: 5.3%
5. Rent: 5.1%
6. Electricity: 4.9%
7. Car Repairs: 4.6%
8. Food Away From Home: 4.1%
Since January 2020, the US Dollar has lost 25% of its purchasing power. Inflation has been compounding for three consecutive years, with prices continuing to rise.
Post-CPI data, the probabilities on Polymarket now indicate a 68% chance of a 25bps rate cut, up from 63% before the data, and a 26% chance of a 50bps cut, down from 33% previously.
Update
President Biden stated that prices are still excessively high and criticized major corporations for not taking sufficient action to lower them.
Stay informed with our financial updates, stocks, bonds, commodities. Get global & political insights. Follow us & enable notifications for the latest updates.
One thought on “US Inflation Drops to 2.9%, Lower Than Expected”