Good news Fed. June was the first month of deflation since 2020. spring Markets expected further steady monthly price growth (0.1 percent), but the result was -0.1 percent. Annual inflation slowed down from 3.3 percent. in May to 3 percent (market expectations 3.1 percent).
This should be good news for the Fed and its chairman, Mr. Powell, who would be free to cut interest rates as early as September. Interest rate cut expectations increased significantly yesterday: now the market is almost 100 percent. expect 0.25 percent. reduction in September, and during this year between the 2nd and 3rd reductions. Bond prices also rose, with 2-year and 10-year government bond yields falling 12 and 8 basis points, respectively. However, the stock markets had mixed reactions – the value of the NASDAQ index fell by over 2 percent, the S&P 500 fell by 0.9 percent, but the small-cap stock index jumped as much as 3.6 percent. up. It is not yet clear whether this is the start of a sector rotation initiated by lower expected interest rates or just profit-taking from overextended US tech stocks.
Commodity price inflation has eased in the last week. Iron ore prices fell nearly 4 percent, while the overall Bloomberg Industrial Metals index fell more than 3 percent. Despite the hurricane in the US and disrupted energy chains, oil prices remained stable, while gas prices fell over 6 percent. in Europe. Lower expected demand from China was one of the main factors behind the fall in demand for industrial metals and energy raw materials.
