In the United States, inflation cooled above expectations in June, easing market concerns about the continued tightening of the Fed ' s policy. Following the release of the data, United States stock futures fell, the United States dollar weakened, and bitcoin rebounded with risk assets to re-close to $65,000.
June CPI below market expectations
According to data from the United States Bureau of Labor Statistics, the consumer price index (CPI) increased by 3.5 per cent in June, down from 4.2 per cent in May and below market expectations of 3.8 per cent. This was the first time that the indicator had fallen after months of continuous growth.
By ring comparison, in June the CPI fell by 0.4 per cent, by 0.1 per cent more than the market expected, and by the largest single month since April 2020. The core CPI after the elimination of food and energy increased by 2.6 per cent compared to the previous value of 2.9 per cent; the ring ratio remained the same.
The fall in energy prices is mitigating
The main driving force behind the fall in inflation in this round is energy. Although energy prices were still 15.7 per cent higher than in the same period the previous year, they were significantly lower than 23.5 per cent in May. Of these, the price of petrol slowed to 26.7 per cent on a year-on-year basis and the monthly ring ratio declined by 9.7 per cent in June.
Food and housing costs are still rising. The food price ratio increased by 0.2 per cent in June, or 3 per cent in the same year; the housing cost ratio rose by 0.1 per cent, and remains one of the more persistent sub-items of price pressure.
Bitcoin is back around $65,000.
Following the release of the data, Bitcoin rose by almost 5 per cent, to about $64,830 in the disk, and then fluctuated around $64,560. Before that, Bitcoin fell by $62,000 as a result of renewed tensions between the United States and Iran.
It is generally accepted that moderate CPI data reduce the pressure for further tightening of monetary policy in the short term and lead to a recovery of risk preferences. With the exception of bitcoin, the United States stock futures rose, the return on United States debt went down, and the United States dollar went down at the same time.
The next CPI will be published on August 12th.
However, the fall in inflation in June has largely benefited from the slowdown in energy prices during the month. With renewed tension in the Middle East, oil prices and transport costs may continue to be strained. The market will then follow up on the July CPI published on August 12 to see if the fall in core inflation continues.