| In June, Core CPI inflation rose 0.1%, below expectations of 0.2%. It’s up 3.3% year-over-year (the lowest since April 2021), below expectations of 3.4%. That’s what the BLS reported yesterday in its latest update. Here’s a breakdown of its key inflation metrics. | ||||||||||||||||||||||
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| Housing inflation slowed considerably in June, dropping from 0.42% to 0.27% month-over-month. This increase is entirely in line with pre-pandemic inflation averages. Until now, housing defied pre-pandemic norms more than any component of core CPI. | ||||||||||||||||||||||
Our take |
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| Honestly, we couldn’t be happier. This is a huge relief. Had the inflation numbers come in hotter than expected, the Fed might have further delayed interest rate cuts. But that’s not gonna happen. The Fed will most likely cut rates by September, possibly earlier. Yields on the 10-year treasury have already fallen, causing the average of the 30-year fixed mortgage rate to slip to 6.85%, its lowest level since early March. We have one more important inflation report before the Fed holds its meeting at the end of July. But if this report is any indication, interest rate cuts are definitely on their way. |
