Wall Street Warns of Inflation’s "False Cooldown" Ahead of Tonight’s CPI; Bond Market Prices In Higher Odds of a July Fed Hike

BlockBeats reports that the U.S. will publish June CPI at 8:30 p.m. Beijing time on July 14. Markets broadly expect headline CPI to slip 0.1% to 0.2% month over month, helped by lower gasoline prices, with the annual rate easing to 3.8% from 4.2% in May. Core CPI is seen rising about 0.2% month over month, while the year-over-year pace is projected to cool to around 2.8%. Several Wall Street firms caution that the apparent deceleration is largely an energy-driven pullback and does not signal that underlying inflation pressures have materially faded. They point to housing, auto insurance, travel services, and tariff-related cost pass-through to goods prices as factors that could keep core inflation sticky. In rates markets, investors have stepped up bets on another Fed move. Interest-rate options indicate the implied probability of a 25-basis-point hike in July has climbed from below 10% to roughly 50%, while the 2-year U.S. Treasury yield remains above 4.25%. Fed Governor Christopher Waller previously said that if core inflation re-accelerates, a short-term rate hike should be considered. Institutions generally argue that even if headline CPI drops on cheaper energy, the trajectory and composition of core CPI will be pivotal in judging whether U.S. inflation has truly peaked and in shaping the Fed's next policy steps.