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LIVE COVERAGE

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INFLATION REACHED HIGHEST RATE IN NEARLY 41 YEARS

Created with Highcharts 9.0.1Consumer-price index, change from a year
earlierSource: Labor Department
Created with Highcharts 9.0.1RECESSIONJune:
9.1%'05'10'15'201982'85'90'952000-2.502.55.07.510.0%

U.S. inflation reached 9.1% in June, its highest rate in nearly 41 years.

The consumer-price index’s reading for June was higher than May’s annual rate of
8.6% that led Fed officials to shift to a faster pace of interest rate
increases.

Major indexes wavered during the session but ended lower, delivering a fourth
consecutive daily decline for the S&P 500.

 * Fed’s Inflation Dashboard Puts More Weight on Volatile Energy, Food Prices
 * Housing Could Provide More Fuel for Inflation
 * For Fed, Easing Too Soon Risks Repeat of Stop-and-Go 1970s


Share

Jul 13, 2022 at 5:01 pm ET


BARKIN SAYS INFLATION FIGHT MUST OCCUPY FED’S FULL ATTENTION


Tom Barkin, president of the Federal Reserve Bank of Richmond./Associated Press

A Federal Reserve official said Wednesday that the central bank needed to ensure
it would bring down inflation even if that raised the prospect of a recession
over the coming year.

“I acknowledge there is near-term recession risk, but I think the medium term is
better if you have inflation under control,” said Richmond Fed President Tom
Barkin in an interview Wednesday. “Our focus should be on controlling inflation.
If we control inflation, we set ourselves up to have a much stronger economy.”

Mr. Barkin spoke after the Labor Department reported Wednesday that inflation
accelerated in June at the fastest pace in more than 40 years. The
consumer-price index rose 9.1% in June from a year before, while so-called core
inflation, which excludes volatile food and energy items, also rose strongly, up
5.9% over the last year.

Mr. Barkin declined to say whether he would favor a larger, one-percentage-point
increase at the Fed’s meeting in two weeks. Before Wednesday’s report, most Fed
officials have said they would favor a 0.75-point rate rise.

“I don’t want to front-run the policy process, but it certainly makes the case
even stronger to continue to be resolute to fight inflation,” he said. “I was
pretty resolute before we got the report. If anything, this puts more backbone
behind my resoluteness.

Read the full article

Share

Updated Jul 13, 2022 at 4:56 pm ET


STOCKS DECLINE AS U.S. INFLATION HITS 9.1% IN JUNE

Created with Highcharts 9.0.1Index performanceSource: FactSet
Created with Highcharts 9.0.1July 11July
13-5.0-4.5-4.0-3.5-3.0-2.5-2.0-1.5-1.0-0.500.5%Dow industrialsS&P 500Nasdaq
Composite

Stocks fell Wednesday after data showed inflation reached a new four-decade high
last month, bolstering expectations that the Federal Reserve will continue
aggressively tightening monetary policy.

Major indexes wavered during the session but ended lower, delivering a fourth
consecutive daily decline for the S&P 500.

The broad U.S. stock index dropped 17.02 points, or 0.4%, to 3801.78. The Dow
Jones Industrial Average declined 208.54 points, or 0.7%, to 30772.79. The
tech-heavy Nasdaq Composite lost 17.15 points, or 0.2%, to 11247.58

Stock futures turned negative after the data showed that consumer-price
inflation accelerated to 9.1% in June. That marked an increase from the 8.6%
recorded in May and was a faster rate of inflation than economists had expected.

But some analysts said investors were anticipating that the inflation report
could disappoint.

“Certainly the market was braced a bit for a report that was probably not going
to look good,” said Yung-Yu Ma, chief investment strategist at BMO Wealth
Management.

Read the full article.


Share

Jul 13, 2022 at 4:47 pm ET


BOND MARKET'S RECESSION WARNING HITS TWO-DECADE HIGH

By Matt Grossman
Created with Highcharts 9.0.1Yields on U.S. TreasurysSource: Tullett Prebon
Created with Highcharts
9.0.1July2.752.802.852.902.953.003.053.103.153.203.253.303.35%U.S. 2 Year
Treasury NoteU.S. 10 Year Treasury Note

As Wednesday's inflation report lifted expectations for Federal Reserve
interest-rate hikes this year, recession signals from the bond market are
growing louder.

The yield on the two-year Treasury note climbed to 3.142% Wednesday, up from
3.043% a day earlier. Meanwhile, the 10-year yield declined to 2.904%, from
2.958% on Tuesday. A bond's yield falls as its price rises.

Yields on Treasury bonds largely reflect investors' expectations for how the Fed
will set short-term interest rates over the life of the bond.

When short-term government-bond yields are higher than longer-term yields--like
they are now-- that is called an inverted yield curve, and it is an indication
that investors expect the Fed will cut interest rates to respond to slowing
growth. Over the past several decades, occurrences of the yield curve becoming
inverted have frequently preceded recessions.

Currently, the gap between the two-year yield and the 10-year yield is at its
most inverted since September 2000.

Share

Jul 13, 2022 at 3:00 pm ET


ECONOMIC OUTLOOK REACHES LOWS, CHICAGO FED SURVEY FINDS

By Hannah Miao

Federal Reserve Bank of ChicagoBrianMolyneaux for The Wall Street Journal

The outlook for the U.S. economy over the next 12 months reached peak pessimism
in June, according to the Federal Reserve Bank of Chicago’s latest gauge
released Wednesday.

The Chicago Fed asks organizations operating in its district to rate aspects of
economic conditions, including hiring, capital spending, and cost pressures, and
calculates indexes each month based on the responses.

The survey’s index on outlook reached its lowest level in June since the series
began in 2013, falling further than the previous low notched in March 2020, in
the early days of the Covid-19 pandemic.

Share

Jul 13, 2022 at 2:43 pm ET


U.S. ECONOMY SLOWS IN SEVERAL PARTS OF THE COUNTRY, FED’S BEIGE BOOK SAYS


Throughout the country, prices for food and energy rose, according to the beige
book, which is a compilation of economic anecdotes collected through July
13.Brandon Bell/Getty Images

Several parts of the country showed signs of slowdown in recent weeks and price
increases remained significant as the U.S. economy continued to modestly expand,
the Federal Reserve said in a report.

Throughout the country, prices for food and energy rose, according to the beige
book, which is a compilation of economic anecdotes collected through July 13.
The latest publication released Wednesday comes as inflation hit 9.1% in June, a
four-decade high.

“Increases in food, commodities, and energy (particularly fuel) costs remained
significant, though there were several reports that price inflation for these
categories had slowed compared with recent months but remained historically
elevated,” the Federal Reserve said.

Read the full article

Share

Jul 13, 2022 at 2:18 pm ET


FEDERAL DEFICIT NARROWED IN JUNE AS SPENDING FELL, RECEIPTS ROSE


June’s drop in federal outlays in part reflected a reduction in spending on
pandemic programs at the Treasury Department.Joshua Roberts/Bloomberg News

The federal government ran an $89 billion deficit during June, a 49% decline
from a year earlier, as spending fell and revenue increased.

Federal outlays in June dropped by 12% to $550 billion, not adjusting for
calendar differences, the Treasury Department reported Wednesday. That reflected
a reduction in spending on pandemic programs, including at the Small Business
Administration and Treasury and Labor Departments.

Government receipts for the month rose by 3% from a year earlier to $461
billion, the Treasury said, as revenue from corporate taxes and customs duties
rose.

Read the full article


Share

Jul 13, 2022 at 2:14 pm ET


WHERE PRICES ROSE AND FELL THE MOST IN JUNE

By Gwynn Guilford
Created with Highcharts 9.0.1Consumer-price index, change from a year
earlierSource: Labor Department
Created with Highcharts 9.0.12020'21'22-40-200204060%Used cars and
trucksGasolineFull service meals and snacksFood at homeAll items

Here is a breakdown of what drove June’s inflation and the few areas in which
price pressures eased:

(To read the full article, click here.)

ENERGY: Prices at the pump and household bills shot up in June, sending energy
prices 41.6% higher in June than a year ago, the steepest climb since 1980, when
the U.S. economy was reeling from an oil shock following the Iranian Revolution.

Prices for gasoline rose 11.2% in June from the previous month, and 59.9% on the
year, as high crude prices and a shortage of refinery capacity drove pump prices
to record highs. Natural gas for home use rose 8.2% on the month, while
electricity increased 1.7%, as the Ukraine war continued to disrupt natural gas
supplies and summer air-conditioning use picked up.

Energy commodities and services combined to make up 8.7% of the average urban
consumer’s spending basket in June.

Gasoline prices began to cool in July, which could show up in the July CPI
report, to be released next month.The national average price for regular was
$4.63 Wednesday, down from a peak of $5.02 on June 14, according to AAA.

WHAT GOT CHEAPER: Airline fares fell 1.8% in June from May, and hotel prices
dropped 2.3%--though on an annual basis, they were up 34.1% and 10%,
respectively.

Smartphone prices fell 20% in June from a year before, while those for
televisions declined 12.7%. In the grocery aisles, prices for uncooked
beefsteaks dropped 0.3% in the 12 months ended in June, after nearly a year of
double-digit gains.

Read the full article.

Your browser does not support iframes

Share

Jul 13, 2022 at 1:50 pm ET


TWITTER SHARES JUMP 8%

By Gunjan Banerji
Created with Highcharts 9.0.1Twitter Inc.Source: FactSet
Created with Highcharts 9.0.1July 131 p.m.33.534.034.535.035.536.036.537.0$37.5

Twitter Inc. shares jumped on Wednesday after the social media company sued Elon
Musk over his attempt to end his $44 billion takeover bid.

A prominent short seller, Hindenburg Research, also made a bullish call on the
social-media company, saying that Mr. Musk does not have a strong case to drop
his acquisition.



Twitter shares rose 8.5% to $36.96 in recent trading, bringing it into the green
for the week. Mr. Musk's move to terminate the deal sent the company’s stock
tumbling 11.3% on Monday.

Nathan Anderson, founder of Hindenburg Research, said that “there is a common
misconception that only $1 billion is on the line,” referring to the breakup fee
Mr. Musk owes Twitter if he does not complete the deal.

“Twitter is suing to enforce the entire $44 billion merger price and they have a
strong case," Mr. Anderson said. "Mr. Musk has squandered much of his leverage.”

Mr. Anderson said this is Hindenburg's first public bullish call on a stock. The
firm has previously made bearish bets on companies such as electric-truck
startup Lordstown Motors Corp. and Nikola Corp.

Twitter Inc.twtr(U.S.: NYSE)
$37.74 USD1.454.00%▲
Share

Jul 13, 2022 at 1:44 pm ET


AIRLINE STOCKS FALL AFTER FRESH INFLATION DATA

By Pia Singh

Airline stocks fell Wednesday after inflation data showed that airline fares
fell in June after jumping in recent months.

The NYSE Arca Airline Index was recently down 1.5%, while the S&P 500 lost 0.1%.

Delta Air Lines was off 5.5%, is down 5.4% during midday trading. The company
reported a second-quarter profit but earnings came in lower than analysts had
expected.

Shares of rival carriers also slipped. American Airlines Group was down 3.4%,
while JetBlue Airways fell 2.5%.

The airline industry is grappling with staff shortages and a historic surge in
travel demand. Heathrow Airport recently said it would limit the number of
departing passengers and has asked airlines to stop selling new tickets for the
summer.

Delta Air Lines Inc.dal(U.S.: NYSE)
$30.09 USD0.321.07%▲
NYSE Arca Airline Indexxx:xal(ICE Gib Ind)
57.481.031.83%▲
Share

Jul 13, 2022 at 1:30 pm ET


NASDAQ RECOVERS EARLY LOSSES AFTER INFLATION DATA

By Eric Wallerstein
Created with Highcharts 9.0.1NASDAQ Composite IndexSource: FactSet
Created with Highcharts 9.0.1July 1310 a.m.11 a.m.noon1
p.m.11050110751110011125111501117511200112251125011275113001132511350

The Nasdaq Composite Index moved into positive territory Wednesday afternoon,
shrugging off early losses, as tech stocks recovered after the hottest U.S.
inflation release data in more than four decades.

After opening nearly 2% lower, the Nasdaq was recently up nearly 0.5%, while the
S&P 500’s tech sector was ahead 0.3%.

The benchmark 10-year Treasury yield initially popped to 3.037%, according to
Tradeweb, compared with 2.958% on Tuesday, sending equities broadly lower.
Expecting a need for more aggressive moves from the Federal Reserve in order to
tame inflation, bond traders tempered their economic growth outlook, which sent
the 10-year yield as low as 2.912%.

That boosted stocks like Amazon.com and Nvidia, lifting the broader index.
Rising long-term yields negatively impact growth-oriented companies, since they
reduce the value investors place on earnings expected long into the future.

Share

Updated Jul 13, 2022 at 1:03 pm ET


INFLATION DATA DRIVES UP DOLLAR

By Julia-Ambra Verlaine
Created with Highcharts 9.0.1WSJ Dollar IndexSource: Dow Jones Market Data
Created with Highcharts 9.0.12022July888990919293949596979899100101

A strong greenback coupled with inflation unseen since the 1980s has investors
worried about a looming U.S. recession. That has reversed this morning’s bounce
in the U.S. dollar after consumer prices hit a four-decade high.

The WSJ Dollar Index, which measures the dollar against a basket of 16
currencies, is down around 0.3% today.

The dollar initially jumped after the higher-than-expected inflation reading.
The data has investors betting the Federal Reserve will move even more
aggressively to raise rates to fight inflation and outpace other global central
banks to do so. That has been one of the main drivers behind the dollar’s
sustained rally this year. The WSJ Dollar Index is up over 11% year-to-date.

But some investors are growing concerned that a higher dollar combined with
inflation could hurt the U.S. economy by simultaneously eroding consumer
spending and hitting corporate revenues. Companies such as Microsoft Corp. have
recently cut earnings guidance citing the dollar’s gains.

“The nagging question on foreign exchange investors’ minds is whether central
banks, including the Fed, do too little or too much to bring inflation back
under control,” said Stephen Gallo, European head of foreign-exchange strategy
for BMO Capital Markets.

Share

Updated Jul 13, 2022 at 12:20 pm ET


GOLD PRICES RECOVER AFTER LATEST INFLATION DATA

By Hardika Singh
Created with Highcharts 9.0.1Gold pricesSource: FactSetNote: Most-actively
traded gold futures contract. As of July 15, 4:59 p.m. ET
Created with Highcharts 9.0.12022July-10.0-7.5-5.0-2.502.55.07.510.012.515.0%

Gold prices regained lost ground Wednesday after June inflation data came in
hotter than expected.

The most-actively traded gold futures gained 0.8% to $1,737.90 a troy ounce,
recovering from an earlier 0.8% slide. Though the haven metal is gaining on
Wednesday, it has fallen 3.9% so far this month, putting it on pace for the
largest monthly percentage decline since last summer.

“It’s rough sledding. It’s going to remain rough sledding,” said Christopher
Vecchio, senior strategist at DailyFX. “So much for the narrative that gold is
an inflation hedge.”

Mr. Vecchio forecasts that gold prices could fall further, to 2021 lows of about
$1,680 a troy ounce.

Analysts say the jump in consumer prices—at its highest rate in nearly 41
years—could pressure the Federal Reserve to continue steeply raising interest
rates to fight inflation. That would send yields on government bonds higher and
strengthen the U.S. dollar, both of which have already contributed to gold’s
decline this year.

Higher yields on government bonds can make gold, which doesn’t pay investors a
fixed income for simply owning the yellow metal, less appealing to hold. A
stronger dollar could make it more expensive for overseas investors to buy gold.

Gold’s recent lackluster performance is a stark contrast from earlier in the
year when the haven metal jumped to near-record levels, boosted by the war in
Ukraine, inflation and a stock market decline. Prices are off 15% from their
2022 highs.

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Jul 13, 2022 at 11:46 am ET


INFLATION MAY HAVE PEAKED, BUT THE FED WON’T BACK OFF


A Walmart store in California. Excess inventories are leading retailers such as
Walmart and Target to put more items on sale.Alisha Jucevic for The Wall Street
Journal

Inflation ran hot last month. It might be about to look cooler, though perhaps
not cool enough.

The Labor Department on Wednesday reported that consumer prices rose a
seasonally adjusted 1.3% in June from a month earlier, putting them 9.1% higher
than a year earlier. That marked the highest pace of inflation since November
1981. A lot of the gain was driven by the jump in gasoline prices: Core prices,
which exclude food and energy items in an effort to better track inflation’s
trend, were up 5.9% from a year earlier. That was down a touch from May’s 6%,
and from March’s multidecade high of 6.5%, but is still way too warm for
anyone’s comfort.

The inflation report cemented expectations that Federal Reserve policy makers
will raise their target range on overnight rates by three-quarters of a
percentage point when they meet in two weeks. That shifts investors’ focus to
what might happen at the Fed’s subsequent policy-setting meeting in late
September. By then, the picture could look different, as prices for many of the
things that pushed inflation higher have lately shown signs of turning over.

Read the full article

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Updated Jul 13, 2022 at 11:30 am ET


VOLATILITY IN BONDS DEEPENS AFTER INFLATION REPORT


U.S. inflation hit a new four-decade high of 9.1% in June.michael
reynolds/Shutterstock

Fresh evidence of accelerating inflation rattled bond markets anew on Wednesday,
sparking large swings in Treasury yields as traders grappled with the potential
for more aggressive interest-rate increases.

Treasury yields, which rise when bond prices fall, jumped immediately after the
government released new consumer-price index data, which showed broad-based
inflation reaching another four-decade high.

Yields on longer-term Treasurys, however, quickly gave up those gains,
reflecting the complex crosscurrents that have led to increased volatility in
recent weeks.

The yield on the benchmark 10-year U.S. Treasury note was 2.945% in recent
trading, down from as high as 3.069% right after the CPI report and its
settlement at 2.958% Tuesday, according to Tradeweb.

The two-year yield, which is even more sensitive to the projected path of Fed
policy, was still clinging to gains on the day, sitting recently at 3.117%,
compared with 3.043% Tuesday.

Traders were particularly concerned about so-called core inflation, which
excludes volatile food and energy categories. That gauge jumped 0.7% in June
from the previous month. That was above the 0.5% increase forecast by economists
surveyed by The Wall Street Journal.

Read the full article

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Jul 13, 2022 at 11:20 am ET


DID THE FEDERAL RESERVE MAKE A MISTAKE?

By Gunjan Banerji

The Federal Reserve building in WashingtonCHRIS WATTIE/REUTERS

Wednesday's inflation figures are exacerbating worries that the Federal Reserve
moved too late to combat inflation.

Investors were already pessimistic heading into the report, with the S&P 500
falling for three consecutive sessions through Tuesday.

The fresh data will likely worsen fears about a recession on the horizon, with
worries about a global slowdown already rippling through bond, stock and metals
markets. After the report, investors ramped up bets on bigger rate hikes.

"Wednesday's inflation reading shows just how wrong the Federal Reserve is,"
said Nancy Davis, founder of Quadratic Capital Management and portfolio manager
of an exchange-traded fund tied to inflation hedges, in emailed comments.

Ms. Davis said that the latest data shows that the Fed was wrong about inflation
being transitory, and waited too long to start raising interest rates.

"It's unclear how the central bank gets the inflation genie back in the bottle
without a lot of pain along the way," Ms. Davis wrote.

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Jul 13, 2022 at 11:11 am ET


TRACK YOUR ITEMS WITH THE JOURNAL’S NEW INFLATION TRACKER

By Bourree Lam

We all are feeling the punch of surging prices in one way or another.

The Journal has put together a price tracker of common items that many Americans
buy monthly to see the direction of prices that matter to you. The Bureau of
Labor Statistics collects the prices of 80,000 items each month for the CPI
basket. While the list is wide-ranging and comprehensive, few Americans actually
buy that many items in a month or even a year.

Think about what you bought in the last week, or the last month. Then use our
tracker to pick items that you purchase regularly to see price trends for the
last year. As you scroll, you will also see how price changes have affected
hundreds of the products tracked by the government.

This living story, which will automatically update with the most-recent prices
from the CPI as new numbers are released, allows you to explore the data.

Your browser does not support iframes

Click here to check it out.

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Jul 13, 2022 at 10:48 am ET


BANK OF CANADA SURPRISES WITH FULL-POINT RATE RISE TO COMBAT INFLATION


Wednesday’s Canadian rate rise was one of the most dramatic moves yet by a
developed-world central bank to drive down inflation.Justin Tang/Bloomberg News

OTTAWA—The Bank of Canada on Wednesday raised its policy rate by a full
percentage point and said that further rate increases are necessary, marking one
of the most dramatic moves to date by a developed-world central bank to drive
down inflation.

The Bank of Canada lifted its target for the overnight rate to 2.50% from 1.50%,
the biggest onetime increase since 1998, when monetary officials tried to
bolster the domestic currency amid financial crises in Asia and Russia. The last
time the Bank of Canada’s policy rate was this high was in the fall of 2008, or
prior to the onset of the global financial crisis. All but one of 12 economists
surveyed last week by The Wall Street Journal predicted an increase of 0.75
points.

The Bank of Canada’s surprise decision follows two straight half-point rate
increases in April and June, and a 0.75-point increase last month by the Federal
Reserve.

Read the full article

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Jul 13, 2022 at 10:37 am ET


CORE PRICES GREW BRISKLY IN JUNE, EVEN FOR GOODS

By Sarah Chaney Cambon

Consumer prices excluding food and energy rose 0.7% in June from a month
earlier, up from a 0.6% increase in May.

The increases were broad-based, with prices rising for vehicles, apparel and
rent.

Some economists noted they were surprised to see prices rise for goods like
apparel and furniture, given that many retailers have recently said they
overstocked on inventories.

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Jul 13, 2022 at 10:34 am ET


RATE-HIKE BOOST PROVES ELUSIVE FOR BANK STOCKS

By Charley Grant
Created with Highcharts 9.0.1Share-price performanceSource: FactSet
Created with Highcharts 9.0.1July 1310
a.m.-3.25-3.00-2.75-2.50-2.25-2.00-1.75-1.50-1.25-1.00-0.75-0.50-0.250%Goldman
Sachs Group Inc.JPMorgan Chase & Co.Morgan StanleyCitigroup Inc.

The likelihood of higher interest rates isn’t making bank investors happy.

Word of the highest inflation in decades Wednesday has stocks down across the
board. Big banks are no exception. The six largest U.S. banks all sold off by
more than 1% on Wednesday morning, continuing a slide that has lasted all year.

That is somewhat surprising, since Wednesday’s inflation report likely seals the
case for another major increase in rates later this month. At least in theory,
higher rates are good for banks because they make lending more profitable. But
that logic only holds if those rate hikes don’t tip the economy into recession.

It won’t be long before bank executives weigh in on how Wednesday’s news will
impact the economy: JPMorgan Chase & Co. and Morgan Stanley are slated to report
second quarter earnings on Thursday morning.

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Jul 13, 2022 at 10:17 am ET


BANK OF AMERICA SEES 'MILD' RECESSION FOR U.S. ECONOMY THIS YEAR

By Michael S. Derby

GABBY JONES for The Wall Street Journal

The U.S. will hit a "mild" recession this year, economists at Bank of America
said Wednesday in a research note.

"A number of forces have coincided to slow economic momentum more rapidly than
we previously expected," they wrote.

The bank sees fourth quarter GDP shrinking by 1.4% this year and then rising by
1% next year.

The bank said the unemployment rate will rise by one percentage point, "which in
turn, will help inflation moderate faster."

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Updated Jul 13, 2022 at 10:05 am ET


GROCERY PRICES RISE AT FASTEST PACE SINCE 1979

By Sarah Chaney Cambon

Grocery prices increased 12.2% in June from a year earlier, the largest increase
since April 1979. Costs for butter and margarine, fruits and vegetables and
cereals all rose briskly.

Some economists say that food prices should ease though in the coming months,
given a recent pullback in agricultural commodity prices.

Created with Highcharts 9.0.1Grocery prices, change from a year earlierSource:
Labor Department via St. Louis Fed
Created with Highcharts
9.0.12013'15'20-10.0-7.5-5.0-2.502.55.07.510.012.515.017.5%Cereals and bakery
productsFruits and vegetablesMeats, poultry, fish and eggs
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Jul 13, 2022 at 9:48 am ET


BEWARE WISHFUL THINKING ABOUT INFLATION AND RECESSION


U.S. inflation hit a new four-decade high of 9.1% in June.Brandon Bell/Getty
Images

Inflation has peaked. The Fed’s tightening has accomplished its mission. Strong
labor market and consumer fundamentals will keep any recession mild.

These are among the story lines providing a tailwind to stocks in recent weeks.
They feed hopes the Federal Reserve has achieved a soft landing: bringing
inflation down to 2% without pushing up unemployment or tipping the economy into
recession.

A reality check is in order. A soft landing is certainly possible, but these
story lines look more like wishful thinking than a tough-minded appraisal of the
Fed’s task. Let’s review.

The inflation threat has passed. Though inflation hit a new four-decade high of
9.1% in June, market sentiment on inflation has improved markedly since early
last month. The Bloomberg Commodity Index has fallen 18% from its 2022 peak,
copper by 33%, lumber by 54% and Brent crude oil by 22%. Since early June
expected inflation over the next five years, based on the pricing of
inflation-indexed bonds, has dropped 0.4 percentage point and over the following
five years by 0.5 point; both are now in the 2% to 2.5% range, near the Fed’s 2%
target.

So has the inflation threat passed? No. It is certainly better to have bond and
commodity markets expecting inflation to go down rather than up. But the Fed has
made it clear it wants to see actual inflation go down; inflation sentiment
alone won’t cut it.

Read the full article

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Jul 13, 2022 at 9:21 am ET


INFLATION TRACKER: WHEN WILL PRICES STOP GOING UP?

This article is updated automatically and will always show the most recently
published data from the Consumer-Price Index. You can come back to this story at
any time to see the latest numbers on inflation.

You know the story: Prices are going up, by a lot.

In June, the consumer-price index rose 9.1% from the year before, the fastest
rate in four decades. Surging energy costs, along with staffing challenges and
labor costs, have been driving prices up on housing, groceries, lawn care, even
haircuts.

Read the full article

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Jul 13, 2022 at 9:04 am ET


TREASURY YIELDS RISE AFTER CPI DATA

By Sam Goldfarb
Created with Highcharts 9.0.1U.S. 10-Year Treasury YieldSource: Tullett Prebon
Created with Highcharts 9.0.1July 12July
132.882.902.922.942.962.983.003.023.043.063.08%

Another hot CPI report has sparked another jump in U.S. Treasury yields.

In recent trading, the yield on the benchmark 10-year U.S. Treasury note was
3.037%, according to Tradeweb, compared with 2.958% Tuesday.

The yield on the two-year note, seen as more sensitive to the near-term
interest-rate outlook, climbed to 3.163% from 3.043% Tuesday.

Created with Highcharts 9.0.1U.S. Two-Year Treasury YieldSource: Tullett Prebon
Created with Highcharts 9.0.1July 12July
133.0003.0253.0503.0753.1003.1253.1503.1753.2003.225%

Yields, which rise when bond prices fall, jumped immediately after the CPI data
was released. Traders were particularly focused on so-called core inflation –
excluding volatile food and energy categories – which jumped 0.7% in June from
the previous month. That was above the 0.5% increase forecast by economists
surveyed by The Wall Street Journal.

The yield on the 10-year note is still down from its 2022 peak of nearly 3.5%,
reflecting recent evidence of slowing economic growth and even some signs of
moderating inflation pressures identified outside of CPI reports.

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Jul 13, 2022 at 9:03 am ET


FED’S INFLATION DASHBOARD PUTS MORE WEIGHT ON VOLATILE ENERGY, FOOD PRICES


Near-term inflation expectations tend to rise and fall along with gasoline
prices.David Paul Morris/Bloomberg News

Another big increase in consumer prices last month keeps the Federal Reserve on
track to raise its benchmark interest rate by 0.75 percentage point at its
meeting later this month.

The consumer-price index rose 9.1% in June from a year earlier, the Labor
Department said Wednesday, a 41-year high. The 8.6% rise in the CPI in May added
to signs last month that the inflation outlook was worsening and prompted the
Fed to accelerate its rate increases at its June meeting.

The Fed’s June rate rise, the largest since 1994, lifted its benchmark rate to a
range between 1.5% and 1.75%. Many Fed officials had already signaled they were
prepared to support another 0.75-point increase at their July 26-27 meeting to
raise rates quickly to levels high enough to slow the economy, and Wednesday’s
report adds to that urgency.

The Fed’s concern about consumers’ expectations of future inflation helps
explain why it is paying closer attention to an inflation measure that includes
volatile food and energy prices as it aggressively raises interest rates.

Normally, the Fed prefers to look through fluctuations in food and energy
categories and focus instead on measures of so-called core inflation, which
remove those volatile items. Core CPI rose 5.9% in June from a year earlier.
Core inflation tends to more reliably forecast future inflation.

Read the full article

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CPI REPORT LIVE UPDATES: STOCKS FALL AS INFLATION REACHED FOUR-DECADE HIGH IN
JUNE

Last Updated: Jul 13, 2022 at 5:01 pm ET


FULL COVERAGE OF JUNE'S CPI REPORT AND THE MARKETS

--------------------------------------------------------------------------------

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