Total CPI for June was up 0.2% month-over-month (consensus 0.3%) with the index for shelter accounting for 70% of the increase. Core CPI, which excludes food and energy, was also up 0.2% month-over-month (consensus 0.3%), which was the smallest month-over-month change since August 2021.
On a year-over-year basis, total CPI decelerated to 3.0% from 4.0% in May, marking its smallest increase since March 2021, while core CPI decelerated to 4.8% from 5.3% in May.
The key takeaway from the report is that there is clear evidence of encouraging disinflation for both total and core CPI that should temper worries about the Fed raising rates again beyond its July FOMC meeting.
Treasury yields, which were already moving lower ahead of the CPI report, took a sharp turn lower in response to the data.
The 2-yr note yield is down 13 basis points to 4.77% and the 10-yr note yield is down seven basis points to 3.91%.