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US CPI eased on YoY basis for the 2nd consecutive month

ICICIdirect Research 13 Aug 2026 DISCLAIMER

News: US CPI eased on YoY basis for the 2nd consecutive month to 3.4% in July, from 3.5% in June. The service sector saw an uptick by 0.2%, led by a 0.1% increase in shelter costs and respective 0.3% and 0.6% jumps in transportation and medical care services. The index for energy decreased 1.5 % in July, after falling 5.7 % in June. The gasoline index decreased 2.9 % over the month but still up by 24.6% from a year ago. Indexes that increased over the month include used cars and trucks, new vehicles and apparel, transportation services, and medical care services. Also, core consumer prices went up 0.2%, following a flat reading in June. US Dollar index edged up, whereas treasury yields fell as the inflation fears eased on mild U.S. CPI. Treasury 10-year yield slipped to 4.668%, While 2-year treasury yield, which typically moves in step with interest rate expectations declined to 4.189%. 

View: Recent soft jobs and CPI reports have eased pressure on the Federal Reserve to hike rates. However, lingering uncertainty over US-Iran peace talks and subsequent oil price volatility keep the possibility of a 25-basis-point hike alive this year. Furthermore, previous dissents from regional Fed presidents favoring tighter policy reinforce a cautious approach toward inflation. Ultimately, July’s moderating figures are not enough to convince markets that further rate increases are off the table

Impact: Neutral

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