"Inflation data increases confidence in a Fed rate cut"
Today's data should "increase investor confidence in a Fed rate cut sometime in the coming months," says Bret Kenwell.
Although some investors are considering the possibility of a cut in July, he states that “the normal thing would be in September.” Regarding the possible reaction of the S&P500, he considers that “in the short term, it could be more moderate than expected” due to the recent rise in the US selective.
The June CPI report is a continuation of the recent trend of moderation in inflation. Today's report should increase investor confidence in a Fed rate cut at some point in the coming months, especially given the recent weakness in the labor market.
The latest inflation reports have been in line or below expectations. Combined with the recent weakness in the labor market, the Federal Reserve is likely preparing a rate cut. Some investors are wondering if a cut could come in July. Although it may be too early for the Federal Reserve, a cut in September would be normal.
Energy and goods weighed on the CPI results, while the stickier services component has finally started to cool a bit. If this trend continues, it will undoubtedly point to a rate cut by the Fed, which is still trying to orchestrate a soft landing.
The S&P 500 is likely to open at or near all-time highs, but the near-term reaction could be more muted than expected thanks to the S&P 500's recent rally. While today's CPI report is good news, the index It has risen in seven consecutive sessions and has set six consecutive all-time highs. Investors were waiting for good data and they got it. But in the short term, we may see some profit taking.
