Gold 
“Economists and analysts are clearly divided about the latest inflation report card, but markets seem to think otherwise. The Consumer Price Index dropped to 3% Y/Y in June, down from a 4% headline rate in May, while core inflation – which excludes volatile food and energy prices – only grew by 0.2% M/M, after climbing by 0.4% or more for the past six months. Following the data release, the S&P 500 (SP500) and Nasdaq (COMP.IND) ended Wednesday’s session at their highest levels in over a year as optimism builds about a soft landing for the U.S. economy.
The good: “The roots of a further decline in the rate of inflation are well established and should support a continuation of the bull market in stocks,” wrote Investing Group Leader Lawrence Fuller. “While the core rate remains well above target, the roots of its decline are staring us in the face. The inflation hawks will do their best to find components of the price index that are not falling in line with the overall rate, but they will come up empty-handed.”
The bad: “Though positive, the CPI report isn’t expected to change the outcome at the Federal Reserve’s July 25-26 meeting,” said SA analyst Justin Purohit. “By moving forward with continued increases, the Fed risks overshooting key components whose deceleration is expected to increase in the back half of the year. With these considerations in mind, I believe the Fed is on track for a policy mistake.”
The ugly: “On the surface, the easy part of the inflation cycle appears to have been completed. The core measure of inflation is undoubtedly better than where they were, but the Fed isn’t likely to take much comfort in one month of better data,” added Mott Capital Management. “Core goods and services are still relatively high, even after modest improvement. It will put into question the fantasy the stock market has had now for some time that inflation is just going to vanish and melt away… and based on the data, the hard part for the markets is likely only beginning.”
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