Unexpected drop in consumer prices in the United States
Consumer prices in the United States unexpectedly dropped in June, according to data released on Thursday by the Department of Labor, which should fuel expectations of a future interest rate cut by the Federal Reserve, Reuters reports.
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The Consumer Price Index (CPI) decreased by 0.1% in June, after remaining stable in May, as reported by G4Media.
Economists interviewed by Reuters were expecting a 0.1% increase. Over the course of a year, the CPI index increased by 3.0%, after 3.3% in May, when economists were expecting a 3.1% increase.
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Inflation Rates and Bond Yields
Excluding volatile elements such as food and energy, the core inflation rate increased by 0.1% in June, compared to 0.2% in May and below the consensus of 0.2%. On an annual basis, the core index rose by 3.3%, slightly lower than the 3.4% recorded in May. Following the release of this data, yields on U.S. government bonds experienced a significant decrease.
Housing Market Trends in Romania
The pace of home sales is picking up in Romania, with Iasi emerging as the largest regional market after the capital. At 12:35 GMT, the yield on ten-year treasury bonds dropped by 8.9 basis points to 4.1907%, while the yield on two-year bonds fell by 12 basis points to 4.513%. Market analysts now believe that a rate cut by the Fed in September is highly likely, with a probability of 94%. Earlier in the week, the market sentiment was different, but recent economic indicators have shifted expectations.
Investors optimistic about potential interest rate cut
Investors are showing optimism about a potential interest rate cut, with a 70% probability assigned to this reduction. Persistent inflation has forced the Fed to postpone rate cuts, but signs that price dynamics are normalizing are encouraging investors.
