CPI Lower Than Expected

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June CPI came in lower than expected. Headline CPI was -0.1% MoM versus +0.1% expected and 3.0% YoY versus 3.1% expected. Core was +0.1% MoM versus 0.2% expected and 3.3% YoY versus 3.4% expected.

Futures initially added to their overnight gains but are approaching flat again, perhaps in recognition that SPX had already reached important Fibonacci resistance yesterday.

The July CPI print should be the first month to fall below 3% as long as oil/gas prices remain steady or lower for the next few weeks.

The bond market responded quickly, with the 10Y tagging our next downside target.

continued for members…

Note that the SPX 1.618 extension of the 2022 correction was at 5638.73. Yesterday’s highs were 5635.39 – awfully darned close. A pullback here wouldn’t surprise, though it might be mild…

… since ES has strong support only 40 points below.

It’s this resistance that should result in some strong algo moves today. We initially saw VIX dip back below its SMA10 and SMA20.And, the USD has understandably broken down in recognition of the fact that interest rates will continue to fall.