July 11 Reuters U.S. consumer prices unexpectedly fell in June and the annual increase was the smallest in a year, reinforcing views that the disinflation trend was back on track and drawing the Federal Reserve another step closer to cutting interest rates.

The consumer price index dipped 0.1 last month after being unchanged in May, the Labor Department said on Thursday. It was the second straight month of tame CPI readings, and could help to bolster confidence among officials at the U.S. central bank that inflation was cooling.

In the 12 months through June, the CPI climbed 3.0 and followed a 3.3 advance in May. Economists polled by Reuters had forecast the CPI ticking up 0.1 and gaining 3.1 yearonyear.

MARKET REACTION

STOCKS The SP 500 was up 0.04 in early trade.

BONDS The 10year U.S. Treasury yield tumbled to 4.189 and the twoyear yield fell to 4.515 FOREX The dollar index extended a fall to 0.59 and the euro extended its early rise to 0.41

COMMENTS

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

These are good numbers, obviously, and this report is good news for the Fed. Its good news for the consumer and good news for the economy. The Markets are going to like these numbers.

This report basically upholds Powells thinking of that 2 inflation rate will be achievable.

Powell has been indicating a rate cut in September. These numbers sell that.

If we have another good inflationary report in August, then I think we could see at…