What has changed after the US CPI report?

Read full post at forexlive.com

Yesterday,
we
got
some
goldilocks
US
data
with
another
soft

US
CPI
report
and
good

US
Jobless
Claims.
First
of
all,
better
than
expected
jobless
claims
should
quell
fears
of
a
deteriorating
labour
market,
at
least
in
the
short
term.
One
thing
to
note
is
that
the
data
might
have
been
distorted
by
the
shorter
week
as
we
had
Independence
Day
last
week.
Nonetheless,
the
next
week
release
should
give
a
better
picture.

The
US
CPI,
on
the
other
hand,
surprised
to
the
downside
and
it
was
good
news
across
the
board.
Moreover,
we
saw
further
easing
in
the
policy
sensitive
OER
measure
with
the
Y/Y
rate
easing
to
5.4%
and
the
3-month
annualised
rate
to
3.6%.
The
Cleveland
Fed
new
tenant
index
is
considered
a
leading
indicator
and
it
points
to
further
easing
in
the
months
ahead.
Below
you
can
see
the
changes
in
various
measures.

The
market
is
now
basically
certain
that
we
will
get
a
rate
cut
in
September
and
December,
but
it
has
also
started
to
price
in
a
third
cut
in
November.
There
are
some
speculations
that
the
Fed
might
even
cut
rates
in
July
but
I
think
that’s
out
of
the
equation.
I
can
see
the
Fed
cutting
rate
in
July
only
if
initial
claims
spike
big
in
the
next
weeks
or
the
stock
market
crashes
like
in
2018
signalling
a
possible
policy
mistake.

It’s
highly
likely
though
that
the
Fed
will
be
dovish
in
July
and
if
we
get
another
benign
CPI
report
in
August,
Fed
Chair
Powell
will
deliver
a
rate
cut
in
August
by
pre-committing
to
a
cut
in
September
at
the
Jackson
Hole
Symposium.
September
will
just
be
a
formality,
but
if
the
data
will
give
them
even
more
confidence,
then
they
will
be
able
to
ease
conditions
even
more
with
a
dovish
SEP.

The
current
estimate
for
the
Core
PCE
Y/Y
measure
is
2.4%,
which
would
be
very
good
news
for
the
Fed.
We
will
see
how
the
estimate
will
change
today
after
the
US
PPI
data.