1. June CPI to Cement September Easing? Today’s key U.S. consumer inflation report is expected to show easing, potentially paving the way for rate cuts in September. Analysts forecast the annual June CPI to slow to 3.1%, with core CPI steady at 0.2% month-on-month. Federal Reserve Chair Jerome Powell, in his testimony to the House of Representatives, emphasized that “more good data” would support the case for cutting interest rates. Current Fed funds futures suggest a 73% chance of easing in September, but any surprise spike in inflation could disrupt these expectations and impact equity markets and the U.S. dollar.
2. Futures Edge Lower Ahead of Key Inflation Release U.S. stock futures are slightly lower this morning as investors await the June CPI report. The S&P 500 and Nasdaq Composite hit record highs on Wednesday after Powell’s comments hinted at potential rate cuts without needing inflation to fall below 2%. Costco Wholesale (NASDAQ
) rose over 2% premarket following a membership rate increase, while WD-40 Company (NASDAQ
) saw a 12% premarket boost from its solid fiscal third-quarter report.
3. Quarterly Earnings Season Set to Start The U.S. quarterly earnings season kicks off Friday with major banks reporting. PepsiCo (NASDAQ
) and Delta Air Lines (NYSE
) will release their results later today. Analysts predict an 8.6% earnings increase and a 4.7% revenue rise for the second quarter, the most significant growth since Q1 2022. The S&P 500 has surged 16% in 2024, driven by a few key stocks benefiting from emerging AI technology. However, only 24% of S&P 500 stocks outperformed the index in the first half, marking one of the narrowest six-month periods since 1986.
4. UK Economy Shows Healthy Growth The U.K. economy grew by 0.4% in May, surpassing expectations and rebounding from flat growth in April. Over the past three months, the economy expanded by 0.9%, the strongest reading since January 2022. This positive news is a welcome boost for Prime Minister Keir Starmer’s government as the economy recovers from a brief recession. The British pound is trading at its highest levels since March, bolstered by growth figures and persistent inflation as indicated by BoE policymakers.
5. Crude Rise After Drop in U.S. Stockpiles Crude prices continue to rise, supported by a significant drop in U.S. inventories. WTI crude futures increased by 0.4% to $82.41 a barrel, and Brent rose 0.4% to $85.39 a barrel. U.S. crude inventories fell by 3.4 million barrels last week, far exceeding expectations, while gasoline stocks dropped by 2 million barrels. The International Energy Agency’s monthly report, due later today, will be closely watched for any updates to its forecasts.
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