Preview of the US CPI YoY
|Purpose
Change in price of goods and services purchased by consumers.
Key highlights
- The US CPI expected to rise in June due to the impact of tariff driven price hikes.
- Core CPI MoM estimated to rise to 0.3% in June while CPI YoY is anticipated to print between 2.60% - 2.7%.
- CPI on Tuesday is expected to show a rebound in gasoline prices and higher costs for some tariff-linked good last month.
- Business surveys have pointed to increase in inflation this summer due to the tariff would be implemented on August 1 on imports from a few countries, including Mexico, Japan, Canada and Brazil, as well as the European Union.
- CME Fed watch is pointing at 95.3% and 59.35% probability of no rate change in July and September.
- Fed Chair Powell has said he wants to see more data before a move.
US interest rate probabilities
- US IR probabilities show about 95.30% and 59.3% no rate change in July and September, respectively.
US 10Y yields technical view
- US 10Y yields formed a double top formation between April 2024 and January 2025 by failing to break 4.74% and 4.81%.
- 10Y yields are facing a robust obstacle around 4.50%.
- Below this resistance a dip to 4.2 -4.10% is likely.
Technical analysis perspective
US CPI YoY:
- US CPI Y/Y remained below 2.2% between November 2012 to January 2017.
- Inflation increased to 2.7% by March 2017 followed by a dip to 1.60% in July 2017.
- Technically, strong resistance when penetrated becomes good support in the future.
- YoY CPI has remained above 2.3% since October 2024.
- Inflation rebounded twice from 2.4% October 2024 to 2.3% in May 2025, forming a double bottom like pattern.
- Such formation favors a rise in inflation from 2.7% to 2.9% in the coming months.
US Core CPI MoM:
- Core CPI rises to 0.3% if it remains above 0.1% for a couple months since April 2011 except on a few occasions where it cooled down.
Word of wisdom
“Inflation can only arise if labor or business, or both, have pricing power by Bill Miller”.
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