US July Inflation looks good! On the surface...

Hi HODLers and Lions,

I know Inflation numbers were released at the start of the week and market participants have been quite positive about it.

The number came under consensus (2.7% vs 2.8% expected) BUT when digging a bit; I actually believe this one is worse than the previous one.

Sticky inflation components are creeping back up

I have highlighted some of them but we could also add the All items less food.

Rent, medical bills are going back up and these are big components of the CPIs.

Tariffs impact should be hitting harder next month as there is no more pre-tariff inventory and Europe, Japan are being hit with the 15% rate.

Energy was a bright spot but this one is very volatile and moving month to month.

Will FED cut rates in September?

A few weeks ago, it was seen as certain (>95%). Some FED officials have now been vocal that they will wait for the next inflation numbers before taking their decision.

Current Prediction market still price a cut at 90% so this is the base case but beware... If inflation picks up and job market holds; there is a path to the FED NOT cutting.

If rates stay high, this will have ramifications on Real Estate, Crypto and Stock markets.

Source

Author's latest publications:

Posted Using INLEO