The core CPI dropped to 4.8 per cent from 5.3 per cent and against predictions for 5.0 per cent

The U.S. inflation rate as measured by the Consumer Price Index (CPI) slid to 3.0 per cent on a YoY basis in June from 4.0 per cent in May, as per the Bureau of Labor Statistics (BLS). Expectations were for a drop of 3.1 per cent. The price of bitcoin – which stayed between $30,000 and $31,000 for much of the past few days – increased to $30,900 immediately after the report, but then gave back that gain, returning to just below $30,800.

The core CPI, which does not take into account volatile food and energy costs, dropped to 4.8 per cent from 5.3 per cent and against predictions for 5.0 per cent; the monthly core CPI was 0.2 per cent in June compared with 0.4 per cent in May and predictions for 0.3 per cent.

Today’s report shows headline inflation continuing to drop, with June’s 3 per cent down from a high of 9.1 per cent in 2022. Maybe more importantly to the policymakers at the Federal Reserve, the core rate of inflation eventually started to shift – to 4.8 per cent from 5.3 per cent – after stubbornly staying above 5 per cent this year. That 4.8 per cent YoY mark was the slowest pace since October 2021.

However, markets and the Federal Reserve (if recent speakers are to be believed) continue to expect another rate hike when the central bank’s rate-setting FOMC meets later this month. The CME’s FedWatch tool shows a 91.1 per cent possibility of the FOMC hiking rates at its July 25-26 meeting.

Though bitcoin is hardly moving on the good inflation news, traditional markets are on the move, with the U.S. 10-year Treasury yield 6 bps lower to 3.91 per cent and the 2-year yield off 14 bps to 4.73 per cent. The dollar index has slid 0.5 per cent and stock index futures are pointing to an almost 1 per cent advance at the open.