CPI and Fed Speeches Test Market Calm

Market Snapshot

Asset	Level	Change
S&P 500	7,515.34	-0.79%
Nasdaq 100	29,264.10	-1.88%
Dow Jones	52,498.64	-0.26%
Russell 2000	2,953.17	-0.83%
USD/JPY	162.26	+0.23%
EUR/USD	1.14	-0.09%
GBP/USD	1.34	-0.10%
Gold	4,027.70	+0.77%
WTI Crude	80.96	+3.61%
Bitcoin	62,674.78	+0.70%
US 2Y Treasury	4.21%	+1.20%
US 10Y Treasury	4.56%	+0.44%

Prior Economic Events

Data	Prior	Cons	Actual
Speech by Fed's Bowman	-	-	-
Speech by Fed's Waller	-	-	-
Monthly Budget Statement	-293,000m	-132,800m	-120,000m

Today's Economic Events

Data	Prior	Cons	Time
ADP Employment Change Weekly	21,000	-	04:15
Core Inflation Rate Month-over-Month	0.20	0.20	04:30
Core Inflation Rate Year-over-Year	2.90	2.90	04:30
Inflation Rate Month-over-Month	0.50	-0.10	04:30
Inflation Rate Year-over-Year	4.20	3.80	04:30
Consumer Price Index	335.12	334.71	04:30
Consumer Price Index SA	333.98	-	04:30
Fed Chair Warsh Testimony	-	-	06:00
Speech by Fed's Barr	-	-	08:40
Fed Goolsbee Speech	-	-	09:00

June budget deficit narrowed to $120 billion, beating forecasts and easing near-term fiscal pressure.
Equities fell with Nasdaq down 1.88 percent as Iran tensions lifted oil to $80.96.
Core CPI and multiple Fed speeches today will test inflation path amid 4.30 percent unemployment.

Yesterday's Recap

The Treasury reported a $120 billion June budget deficit, narrower than the $132.8 billion consensus and prior $293 billion gap, reflecting stronger customs receipts. Fed Governor Michelle Bowman and Governor Christopher Waller both spoke, with Waller emphasizing inflation vigilance. Equity markets closed lower as S&P 500 fell 0.79 percent to 7,515.34 and Nasdaq 100 dropped 1.88 percent to 29,264.10 amid Iran-related risk-off flows.

The 2-year Treasury yield rose 1.20 percent to 4.21 percent while the 10-year yield climbed 0.44 percent to 4.56 percent. WTI crude surged 3.61 percent to $80.96 and gold advanced 0.77 percent to $4,027.70. EUR/USD eased 0.09 percent to 1.14 and USD/JPY gained 0.23 percent to 162.26.

Retail sales resilience and the budget print supported the view that the consumer remains firm despite higher yields. US GDP grew 2.10 percent annualized in the first quarter and 2.68 percent year-over-year, while retail sales rose 6.88 percent over the same twelve-month span, confirming steady underlying demand.

The Day Ahead

Core CPI month-over-month and year-over-year prints at 8:30 a.m. ET carry high market impact with consensus holding at 0.2 percent and 2.9 percent respectively. Headline CPI is expected to cool to 3.8 percent year-over-year from 4.2 percent.

ADP employment change, the full Consumer Price Index, and seasonally adjusted CPI follow at the same time. Fed Chair Kevin Warsh testifies at 6:00 a.m., Governor Michael Barr speaks at 8:40 a.m., and Presidents Austan Goolsbee and Lisa Cook appear at 9:00 a.m. and 9:30 a.m.

A second Bowman speech is scheduled for 10:55 a.m. Traders will parse every remark for signals on policy amid the verified 4.30 percent unemployment rate. These releases arrive against a backdrop of resilient consumer metrics that may limit downside surprises in price data.

Other Economic Notes

The Supreme Court ruling on illegal customs duties has already triggered $81 billion in refunds since fiscal-year start, providing an accidental fiscal cushion to corporate balance sheets. <i>↓ p.2</i>

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Other Economic Notes (continued)

Senate discussions highlighted how federal benefit-cliff rules continue to penalize low-income households for modest wage gains, limiting labor-supply incentives. US GDP grew 2.10 percent annualized in the first quarter and 2.68 percent year-over-year, while retail sales rose 6.88 percent over the same twelve-month span, confirming steady underlying demand. These buffers may blunt the pass-through from higher energy prices into core inflation readings.

The combination of fiscal refunds and solid consumer spending gives policymakers additional room to assess incoming price data without immediate alarm.

Global Macro News

Twelve states sued to halt Paramount’s $110 billion acquisition of Warner Bros. Discovery, alleging reduced competition in distribution and cable markets and raising deal-completion risk. UAE state oil firm ADNOC began loading cargoes outside the Strait of Hormuz, offering buyers a route that bypasses potential chokepoint disruptions.

India trimmed its US Treasury holdings to a six-year low as the RBI accelerated reserve diversification away from the dollar. The dollar’s share of global foreign-exchange reserves fell to its lowest level this century, underscoring gradual de-dollarization trends. Oil prices reached one-month highs after renewed US-Iran tensions, supporting WTI’s 3.61 percent gain.

Australian dollar weakness reflected growth concerns despite a hawkish RBA stance, while Egypt’s balance-of-payments data showed reserve gains that could ease external financing pressure on emerging-market spreads.

Fed Watch

Governor Waller stated his focus remains squarely on inflation and signaled potential rate increases if price pressures reaccelerate. Markets now assign lower odds to near-term easing following the prior CPI upside surprise. The 2-year yield at 4.21 percent and 10-year at 4.56 percent embed a higher-for-longer path consistent with verified 4.17 percent May CPI.

Multiple speakers today, including Warsh and Goolsbee, will refine forward guidance ahead of the next FOMC meeting. The committee has reiterated data dependence without committing to any specific vote split on future moves. Sustained 4.30 percent unemployment alongside resilient retail sales gives the Fed room to maintain the current stance until inflation convincingly returns to target.

US Macro Daily(Beta Mode)