• Fed Strategy: The #FOMC can take its time and wait for more data before making policy changes.
• Inflation View: One month of higher #CPI and #PPI readings does not establish a trend.
• Key Takeaway: The #Fed views the recent inflation uptick as a potential outlier, not yet evidence of persistent #inflation.
Breaking: BoC kept interest rate unchanged at 2.25%, as expected.
WTI crude oil’s outlook remains neutral to bullish.
Ongoing tensions between the US and Iran near the Strait of Hormuz are helping sustain a geopolitical risk premium, which is offsetting concerns about weak demand.
Although the proposed 20% transit toll was withdrawn, the US naval blockade and retaliatory military actions continue to pose risks to supply chains and support supply-related anxiety.
As a result, these persistent geopolitical tensions have helped create a firm price floor and are maintaining an upward bias in WTI prices.
US June CPI came in softer than expected, weighing on the US dollar and lifting stocks as inflation pressures eased.
Middle East tensions remain elevated after US strikes on Iran. Oil prices stay high, with President Trump warning of possible attacks on energy infrastructure next week.
Fed Chair Kevin Warsh said the fight against inflation is not over despite the softer CPI report. Markets now await his second day of testimony.
US June PPI data is due today, with Core PPI expected to edge higher and provide another key inflation signal.
China’s Q2 2026 GDP growth slowed to 4.3%, while investment contracted sharply. Industrial production and retail sales were comparatively stronger.
Bank of England Governor Andrew Bailey urged the new UK government to focus on boosting economic growth.
The Bank of Canada is widely expected to keep interest rates unchanged at 2.25%, with markets also watching policymakers’ comments on the US economic outlook.
The financial landscape is marked by easing inflation pressures in the US, rising tensions in the Middle East affecting oil prices, and global economic growth concerns, particularly in China and the UK.
The softer-than-expected US inflation report improved market sentiment and supported risk assets.
The moderation was driven primarily by lower energy prices during June, while underlying inflation also continued to ease.
However, the CPI report is backward-looking and reflects June conditions. Since then, energy prices and geopolitical risks have evolved, meaning the latest data may not fully capture current inflation pressures.
The report reduced expectations of an immediate Federal Reserve rate hike, but policymakers are still likely to maintain a restrictive stance until there is clearer evidence that inflation is sustainably moving toward target.
Traders should remain focused on upcoming inflation releases, US labor market data, and developments in energy markets, as these will be critical in shaping the Fed’s next policy decisions.
Bottom Line: The CPI report was a positive surprise for markets, but it may already be outdated. Whether the rally can continue will depend on incoming data rather than the June inflation print alone.
