Tony Welch of SignatureFD says weak June CPI strengthens the case that markets
have overestimated the odds of a near-term Fed rate hike. Futures now show a low
probability of a move this month, though CME Group pricing still leaves at least
one hike this year possible. Welch says inflation is trending down even allowing
for fuel swings and that wage growth is not broad enough to economy sustain-wide
inflation. He expects Fed Chair Warsh to use his rhetoric to help anchor
inflation expectations near the Fed’s 2% target.
