US CPI likely to fall to 3%, lowest since March 2021

July 12, 2023 (MLN): The upcoming U.S. consumer price index data due today at 05:30 PST will likely show a significant decline in both overall and underlying inflation rates, which could have a significant impact on policy decisions in the near future.

According to experts, today’s CPI data is pivotal for policymakers in the months ahead.

Market consensus expects a significantly low CPI of around 3.1% YoY, down from the last month’s 4%.

“Optics and narratives matter, and the weak CPI readings we anticipate for June could prove pivotal in shaping inflation expectations in coming months,” Bloomberg economists Anna Wong and Jonathan Church wrote Tuesday in a preview of the numbers.

Moreover, the monthly pace of core CPI will likely be the slowest since 2021.

According to JPMorgan, a CPI in the range of 3%-3.2% will send the U.S. stock market S&P 500 index up by 0.5-0.75%, while a reading below 3% will send it flying by more than 1.5%-3%.

To note, S&P 500 index is up 15.62% year-to-date, and technology composite index NASDAQ 100 is up a significant 38.16% YTD.

While the 02-year U.S. treasury yield is at 4.86% as compared to the 2022 close of 4.4075%.

Similarly, the 10-year U.S. treasury yield is at 3.942% as compared to the 2022 close of 3.8790%.

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