The market puts the Fed’s projections in check after the good inflation data for June

The pleasant surprise in the US inflation Powell’s testimony on Capitol Hill (last Tuesday and Wednesday) is reinforced. The words of the Fed president left the feeling that the cycle of rate cuts is getting closer.

The unemployment rate has recently increased and inflation is slowing down at a faster pace than the market expected. The dual risk facing the organization (employment and inflation) is increasingly present in speeches, as well as the fact that the weakening of the labor market is no longer exerting pressure on prices.

Beyond this, Powell also said they need to watch for more positive data to ensure inflation is heading toward the 2% annual target.l. For this reason, the reading of the Consumer Price Index for June published on July 11 is particularly relevant.

Specific, Deflation was recorded in June, the monthly change in the general reading fell by 0.1%, slowing down from 0% in the previous month and surprising analystswho were expecting growth of 0.1%.

The energy prices continued to contribute to the fall of the general index, with a 0.1% drop in the segment, dragged down by the fall of the same magnitude in gasoline. This occurred in a context where oil (WTI) rose 5.9% in the month, so this increase may be reflected in gasoline prices only in July. Thus, inflation totals 3% in the last 12 months, below the 3.1% and 3.3% of the previous month.

In parallel, Core inflation, which excludes food and energy prices, was 0.1% monthly, below both analysts’ estimates and the previous reading, both at 0.2%.

The annual variation of the core thus slowed from 3.4% in May to 3.3% in June, surprising the market which was expecting 3.4%.

For its part, inflation supercorewhich is the core except for the housing sector, recorded a negative reading for the second consecutive month, going from -0.045% in May to -0.054% last month.

PPI Analyst