Here’s another rewritten version with a fresh flow and a concise market-analysis style:
The June inflation report may be a key factor in deciding whether the Federal Reserve proceeds with a rate hike at its late-July policy meeting.
U.S. inflation slowed more than expected in June, weakening the case for an immediate increase in interest rates and reversing some of the recent rise in hawkish market expectations.
The Consumer Price Index (CPI) declined 0.4% during the month, compared with economists’ expectations for a 0.1% drop and following a 0.5% increase in May.
Annual headline inflation eased to 3.5%, falling short of forecasts for 3.8% and improving from May’s 4.2% reading.
Core CPI, which excludes food and energy prices, remained unchanged month over month, missing expectations for a 0.2% gain and matching May’s increase. On an annual basis, core inflation rose 2.6%, below estimates of 2.8% and down from May’s 2.9%.
Risk assets reacted positively to the cooler inflation data. Bitcoin extended its upward move, reaching around $63,400 and gaining approximately 2% over the past 24 hours. U.S. stock futures also advanced, with Nasdaq 100 futures climbing 1.25%.
Bond markets rallied as traders reduced expectations for tighter monetary policy. The yield on the two-year Treasury note dropped seven basis points to 4.19%, while the 10-year yield declined five basis points to 4.56%.
The CPI release carried extra importance after Fed Governor Chris Waller signaled that a rate increase could be warranted if core inflation failed to show further progress. Ahead of the report, traders had sharply increased bets on a July hike, with CME FedWatch data showing the probability rising to 42% from only 8% a month earlier.
Market attention now shifts to Fed Chair Kevin Warsh’s congressional testimony, where investors will look for guidance on inflation risks, economic conditions, and the central bank’s upcoming policy decisions.
