- Prior was 3.5%
- Unrounded +3.365%
- CPI m/m +0.1% vs +0.1% exp
- Prior CPI was -0.4%
- Unrounded CPI m/m +0.074% vs -0.422% prior
Core readings:
- Core y/y 2.5% vs 2.5% expected — lowest since Feb
- Prior core was 2.6%
- Core m/m +0.2% vs +0.2% expected
- Prior m/m +0.0%
- Unrounded +0.215% m/m vs -0.017% prior
- Core-CPI services ex-Rent/OER (supercore) was +0.189% m/m vs. -0.203% prior
- Core-CPI services ex-shelter +0.355% m/m vs. -0.089% prior
- Core goods +0.2% m/m vs -0.086% m/m prior
Ahead of the report, the market was pricing in a 44% chance of a rate hike in September and 24.4 bps in hikes this year. USD/JPY was trading at 159.04 ahead of the report.
Afterwards, the hike odds are at 39% for September. The US dollar is broadly lower in the aftermath to 158.92. The bigger dollar moves are elsewhere but limited to 15-20 pips against the majors. Gold hit a sessoin high afterwards, up $55 to $4422.
Key sub-components:
- Owners’ equivalent rent: +0.3% vs +0.24% prior
- Rent of primary residence: +0.3% vs +0.15% prior
- Motor vehicle insurance: -0.3% vs -2.0% prior
- Airfares: +2.2% vs +0.2% prior
- Used cars: +0.4% vs -0.2% prior
- Apparel: +0.1% vs -0.6% prior
- Medical care: +0.4% vs -0.1% prior
- Lodging away from home: -2.8% vs -2.3% prior
- Energy m/m: -1.5% vs -5.7% prior
- Gasoline m/m: -2.9% vs -9.7% prior
- Food m/m: +0.1% vs +0.2% prior
Overall, this report certainly gives cover for the Fed to hold again in September but we still have another inflation report before the decision, and a standstill that continues in Hormuz. Stock markets have cheered the move so far and S&P 500 futures are up 0.45%. US 2-year yields are down 3.6 bps to 4.18%.
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