US stock indices finished the week at, or near, all-time highs, boosted by positive 2nd quarter earnings reports and good economic data. Initial jobless (unemployment) claims for the week ending July 12 decreased from the prior week, and June retail sales surpassed expectations.
However, the most important economic report this week was the June inflation report. It showed the consumer price index (CPI) rose 0.3% in June, putting the 12-month inflation rate at 2.7%, which was in line with expectations. Core inflation (CPI minus food and energy) picked up 0.2% on the month, with the annual core inflation rate moving to 2.9%, in line with forecasts.
https://www.cnbc.com/2025/07/15/cpi-inflation-report-june-2025.html
President Trump pointed to the tame inflation report as a green light for the Fed to cut interest rates, but it’s hard to find any significant signs of weakness in the US economy that would cause them to cut rates in the midst of the current tariff uncertainty.
How many rate cuts will there be before year-end? Here are the odds according to the market:
No rate cuts = 6.3%
One rate cut = 30.6%
Two rate cuts = 43.2%
Three rate cuts = 19.4%
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
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