U.S. June CPI Falls 0.4% Month-over-Month, Fed Rate Hike Odds for July Plunge to 17%

According to E Daily, U.S. June CPI declined 0.4% month-over-month on July 14, marking the first monthly drop since April 2020, and came in below market expectations at 3.5% year-over-year versus forecast 3.8%. The softer inflation reading sent July rate hike odds plummeting from 42% to 17% on CME FedWatch, and the S&P 500 rose 0.38% to 7,543.59 while the Nasdaq Composite gained 0.90% to 26,107.01.

Federal Reserve Chair Kevin Walsh underscored the central bank's commitment to tackling inflation, calling it "a tax imposed on Americans" and declaring a "regime change" in monetary policy. However, escalating Middle East tensions reignited geopolitical risk premiums, with Brent crude rising 1.7% to $84.73 per barrel, suggesting rate hike risks may not fully disappear despite the dovish CPI read.