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US Equities Slump Amid Inflation, Trade Fears
US equities were trading lower Wednesday after President Trump’s persistent calls to oust Federal Reserve Chair Jerome Powell overshadowed a mixed inflation report. The market reaction also reflects concern over potential tariff-induced price increases.
Inflation: CPI Fulfills Expectations But Warrants Caution
June’s Consumer Price Index (CPI) registered a headline increase of 0.3% month-over-month. The year-over-year rate settled at 2.7%, meeting expectations but diverging from the preceding 2.4% reading, indicating a plateau, dismissed the elevated tariffs month-over-month in the headline. Economists should apply a degree of scrutiny.
The Bureau of Labor Statistics (BLS) disclosed last month that it could not fulfill its standard sample size due to staffing shortfalls. Implications include a likely over-reliance on statistical estimation for June’s data, contributing to currently certified price increases of 35%, compared to the preceding 10%.
Car prices softened by 0.3% over the month, while durable goods (up 1%) and household furnishings (up 1.9%) – both sectors vulnerable to U.S. tariffs – exhibited more significant upward movements.
The latest inflation data nudged market expectations for the Federal Open Market Committee’s meeting toward a neutral stance, with a 97.4% probability favoring a held rate decision at the upcoming pivotal gathering later this month.
Focus Remains on the Fed: Congressional Policy Stalemate
The larger concern, driving significant investor anxiety, involves the political environment around the central bank. President Trump, building upon an earlier threat, allegedly drafted a memo targeting Fed Chair Jerome Powell over an administrative staff accountability memo concerning the Fed’s office renovation.
Heralded initially Wednesday as potentially shelve, Trump then distanced the effort from formal action. Nevertheless, the administration perceives grounds for失信 based on either falsified testimony regarding the $2.5 billion renovation or potential missing procedural paperwork.
Cryptocurrency Policy Outlook Remains Uncertain
In response to legislative developments, President Trump directed a Truth Social post expressing support for crypto-friendly bills.
Despite sentiment, Tuesday’s Senate vote thwarted the procedural “filibuster” necessary for the previously Республикански-sponsored GENIUS Act. The rejection stems from Freedom Caucus concerns regarding its séparation de variable with another concurrent legislative measure.
