The standard models predict that the next 2-3%-points of disinflation will require a significant employment sacrifice, but those models missed both the run-up and partial climb down in inflation. Core CPI is already off 1.7%-points from its high. With the acknowledgment that one month does not establish a trend, there are indications that the narrow path to a soft landing has slightly widened. While inflation remains elevated, the deceleration will be welcome news to policymakers. The three parts of inflation Chair Powell has highlighted, core goods, core services, and core services ex-shelter all slowed to end the second quarter. The Dollar was lower and hit a YTD trough of 100.500 after the cooler-than-expected June US CPI report resulted in pronounced bull-steepening along the Treasury curve.Įasing concerns about higher inflation resulted in a decrease in Treasury yields, with the US 10-year yield retreating to 3.80%. WTI crude oil closed at its highest level since late April, while Gold tested the resistance at $1,957.
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