June CPI a salve for July rate hike concerns

Briefing.com Summary:

*IBM is imploding after a Q2 earnings warning.

*The June CPI report brought some good inflation news and some rate-hike relief.

*Semiconductor stocks are back in rebound mode.

The S&P 500 futures are up 18 points and are trading 0.2% below fair value, the Nasdaq 100 futures are up 318 points and are trading 1.1% above fair value, and the Dow Jones Industrial Average futures are down 93 points and are trading 0.1% below fair value.

We’re leading today with the indications for the equity futures market, which point to a relatively mixed open, because it is a pretty astounding and resilient indication when you consider the following:

• IBM (IBM) is down 22% after issuing a Q2 earnings warning that was tied to a performance shortfall for its software and infrastructure business. 
• JPMorgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) are all lower after easily exceeding Q2 consensus EPS estimates. Goldman Sachs (GS), the highest-priced Dow component, and Bank of America (BAC) are higher after their better-than-expected results, so a mixed response overall.
• WTI crude futures ($80.80, +2.66, +3.4%) are above $80.00/bbl as President Trump warns Congress about the start of a new war with Iran.
• KeyBanc downgraded Apple (AAPL), due in part to a belief that iPhone builds will slow due to price increases.
• The July Bank of America Global Fund Manager Survey has a contrarian hue, with the Bull & Bear Indicator showing an “extreme bull reading” at 9.4.

Ah, but that has all been swept to the side for the time being in favor of a Consumer Price Index for June that was better than expected and a salve for concerns that the Fed may raise rates at its July meeting.

Total CPI was down 0.4% month-over-month in June (Briefing.com consensus: -0.1%), which was the largest one-month drop since April 2020. That move was paced by a 5.7% decline in the index for energy. Core CPI, which excludes food and energy, was unchanged month-over-month (Briefing.com consensus: 0.2%), leaving it up 2.6% year-over-year versus 2.9% in May. Total CPI was up 3.5% year-over-year versus 4.2% in May.

The key takeaway from the report is the softening in core inflation and the added softening in super core inflation, which excludes food, energy, and shelter. That component was up just 2.1% year-over-year. Inflation has not been slayed, but this report should be enough to keep the FOMC on hold at its July 28-29 meeting.

The timing of this release was about as good as it gets for Fed Chair Warsh, whose prepared remarks for his semi-annual monetary policy testimony before the House Financial Services Committee at 10:00 a.m. ET were released about the same time and acknowledged that the Committee has no tolerance for persistently elevated inflation. Getting policy right, he said, will mean the inflation surge of the last five years “will be a thing of the past.”

Market participants have reason to like that aim, but the renewed jump in oil prices is a distraction in that pursuit.

Currently, the 2-yr note yield is down seven basis points to 4.19%, while the 10-yr note yield is down four basis points to 4.57%. All of that improvement came after the CPI release. Relatedly, the probability of a 25-basis point rate hike at the July FOMC meeting has been slashed to 16.6% from 41.7% yesterday, according to the CME FedWatch Tool.

The directional bias in the Treasury market is a good one at this juncture for high-beta stocks, and sure enough, the semiconductor stocks are back on a raging rebound path.

The semiconductor trade is almost becoming its own thing—its own little party, if you will. Not everyone is invited to that party, but others have found reason to celebrate elsewhere for now thanks to the rate relief and evidence in the earnings news from the banks this morning that the economy and capital markets are still functioning quite well.

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Originally Posted July 14, 2026 – June CPI a salve for July rate hike concerns