TechFlow News, July 14, Analyst Matthew Weller stated that whether inflation has peaked is the market's most pressing concern ahead of the June CPI report release. For the first time in three months, the Strait of Hormuz partially reopened in the latter half of June, causing energy prices to drop sharply, while the lagging impact of Trump's now-defunct "Liberation Day" tariffs may have been largely priced in by the market.
Against this backdrop, traders and economists expect the overall month-over-month inflation rate to record negative growth for the first time in over a year, which will ease market concerns about imminent Fed rate hikes. The federal funds futures market is currently pricing in a 35% probability of a Fed rate hike at this month's meeting, following a relatively hawkish tone at last month's meeting under the leadership of new Fed Chair Wash. Although the hawkish outlook may be overly optimistic, an unexpected CPI report, combined with Chair Wash's appearance before Congressional hearings on Tuesday and Wednesday, could still trigger abnormal volatility in major markets amidst the uncertainty. (Jin10)
