U.S. Inflation Cools Across the Board

June CPI turned negative month-on-month for the first time in four years, and core year-on-year growth hit a more than three-year low. Expectations for a rate cut this year have risen sharply, with the likelihood of a September rate cut climbing to 80%, and the probability of a July rate cut reemerging.

"New Fed Communications" on June CPI: Inflation is mild, opening the door for a rate cut in September. Investors expect increased chances of rate cuts in September, November, and December. A key issue for this month’s Fed meeting is how much groundwork officials are laying for a September rate cut. Timiraos mentioned yesterday that "Powell's pivot" will be more sustainable than at the end of last year.

Two senior Fed officials spoke on Thursday, indicating progress in inflation.

The St. Louis Fed President said the current policy rate is appropriate at this stage.

The San Francisco Fed President said recent employment and inflation data might necessitate a rate adjustment, but gave no specific timetable for a rate cut.