U.S. inflation came in exactly where economists expected for June and somehow, that’s not the good news you’d think. Headline CPI rose 0.3% on the month, putting annual inflation at 2.7%, the highest since February. Core CPI, which strips out food and energy, ticked up just 0.2%, slightly softer than expected.

On paper, this looks like a “steady” report. But let’s be real: expectations were already grim. The fact that we met those expectations doesn’t make them bullish. If anything, the data confirmed what traders feared, tariffs are feeding price pressures, keeping the Fed stuck in wait-and-see mode.

Here’s what you need to know so far:

1. CPI Matches Forecasts, But Inflation Is Sticky

The Bureau of Labor Statistics data shows headline inflation climbing 0.3% in June and 2.7% YoY, hitting its highest level since February. Core inflation eased slightly at 0.2% MoM, but annual trends remain uncomfortably above the Fed’s 2% target. Translation: this isn’t the kind of “in-line” print that brings relief.

2. Tariffs Are Doing the Heavy Lifting

Analysts, including Ebury’s Matthew Ryan, are pointing fingers at Trump’s tariffs as a key driver of higher consumer prices. With more duties scheduled for August, inflation risks aren’t going away. For traders, this means the Fed can’t turn dovish too fast, even as growth jitters mount.

3. Fed Pivot? Not So Fast

Markets were hoping for a data miss to revive hopes of a September rate cut. Instead, the CPI print keeps the Fed on the sidelines. Traders still price in about 60% odds for a cut this year, but Powell’s “meeting-by-meeting” mantra means one thing: CPI just told the Fed there’s no rush.

4. Dollar Holds Firm, Risk Assets Struggle

Stocks dipped on the news, and while the Dollar didn’t rip higher, it held its ground as yields stayed elevated. For us FX traders, USD remains supported, especially against currencies like JPY and EUR, as long as inflation refuses to cool meaningfully. And as for Commodities, Gold’s upside is capped for now unless the macro tide shifts.

5. What Should We Watch Next?

The inflation story isn’t over. PPI lands tomorrow, and any upside surprise there will only reinforce the “sticky prices” theme. Plus, Trump’s tariff headlines aren’t slowing down, and that adds fuel to inflation fears. Pair that with the upcoming FOMC meeting, and you’ve got plenty of volatility ahead.

Here’s the Takeaway:

Inflation didn’t shock, but it didn’t soothe either. June CPI confirmed what markets feared: tariffs are biting, prices aren’t rolling over, and the Fed isn’t cutting anytime soon. For now, the path of least resistance is more range-bound chop with the Dollar holding firm and risk assets walking on eggshells.

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