Cool CPI data sends futures higher

The S&P 500 futures are up one point and are trading in line with fair value, the Nasdaq 100 futures are up eight points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up two points and are trading in line with fair value.

Total CPI was down 0.1% month-over-month in June (Briefing.com consensus 0.1%) after no change in May. Core CPI, which excludes food and energy, was up 0.1% month-over-month (Briefing.com consensus 0.2%) after increasing 0.2% in May.

On a year-over-year basis, total CPI was up 3.0%, versus 3.3% in May, while core CPI was up 3.3%, versus 3.4% in May.

The key takeaway from the report is that the market heard exactly what it hoped for, as CPI deflated slightly in June, contributing to additional disinflation on a year-over-year basis. The 3.0% year-over-year growth rate matched the low from 2023, which will be seen as supportive of a case for a rate cut from the FOMC.

Initial jobless claims for the week ending July 6 decreased by 17,000 to 222,000 (Briefing.com consensus 234,000) from last week’s revised rate of 239,000 (from 238,000). Continuing jobless claims decreased by 4,000 to 1.852 million from last week’s revised rate of 1.856 million (from 1.858 million).

The key takeaway from the report is that initial claims continued backtracking from a high that was reached in June, suggesting that the labor market is holding up well despite restrictive policy from the Fed.

The 10-yr note yield moved sharply lower in response, from 4.29% to 4.19%. The 2-yr note yield, which is most sensitive to changes in the fed funds rate, moved from 4.63% to 4.51%.

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Originally Posted July 11, 2024 – Cool CPI data sends futures higher