BREAKING: Odds of a Fed rate cut by September 2024 skyrocket to 83% after June CPI inflation, according to Kalshi.
June 2024 marked the first NEGATIVE month-over-month inflation print since May 2020. Headline inflation is now at a 12-month low and 100 basis points away from the Fed's 2% target. Prior to the CPI inflation report today, prediction markets saw a 67% chance of rate cuts by September. Exactly 1 year ago, the Fed stopped raising interest rates. Does the Fed have the green light to cut rates? Source: The Kobeissi Letter
🚨 BREAKING NEWS: US CPI for June just came in at -0.1% MoM below expectations of 0.1% MoM
US CPI for June just came in at +3% YoY below expectations of +3.4% YoY Core CPI inflation fell to 3.3%, below expectations of 3.4%. This marks the 39th consecutive month with inflation at or above 3%. It's also the 3rd straight month with declining CPI inflation. Looks like a September rate cut is coming. Source: Jesse Cohen
US CPI estimates by firm
TD Securities: 3.0% JP Morgan: 3.1% Wells Fargo: 3.1% Citadel: 3.1% Barclays: 3.1% CitiGroup: 3.1% Goldman Sachs: 3.2% Bank of America: 3.2% Morgan Stanley: 3.5% Previous: 3.3% Median: 3.1% Source: TrendSpider
Some wise words by Reagan
Source: Wall Street Silver
An important US macro data is expected today: the CPI inflation data for June. The median forecast for headline CPI inflation is 3.1%, but markets are showing a wide range.
Prediction markets currently show that there is a 19% chance of June CPI inflation coming in ABOVE 3.1%, according to Kalshi. On the other hand, there's a 31% chance of inflation coming in BELOW 3.1%. There's even a 5% chance of CPI coming in above 3.3%, which would put inflation back on the rise. If CPI inflation comes in as expected, it would mark the 3rd straight monthly decline in YoY inflation. Source: The Kobeissi Letter
Federal Reserve Chair Jerome Powell on Tuesday expressed concern that holding interest rates too high for too long could jeopardize economic growth.
Setting the stage for a two-day appearance on Capitol Hill this week, the central bank leader said the economy remains strong as does the labor market, despite some recent cooling. Powell cited some easing in inflation, which he said policymakers stay resolute in bringing down to their 2% goal. “At the same time, in light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said in prepared remarks. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.” Source: CNBC, Yusuf on X
Italians make in real terms less today than they used to in 1990, one really needs to admire how calm they stay about it.
Chart: Michel A.Arouet, @heimbergecon
BREAKING: US consumers' average 5-10 year inflation expectations have spiked to 5.6%, the highest in 31 years.
This measure increased by ~2 percentage points in just a few months. By comparison, median inflation expectations are around 3%, in-line with the readings seen over the last 3 years. Meanwhile, CPI inflation has been above 3% for 38 consecutive months, the longest streak since the 1990s. Will inflation stay a major issue in H2 2024? Source: The Kobeissi letter, Bloomberg
