US June Inflation Decline Softens Fed Rate Hike Expectations

US inflation surprised to the downside in June, with headline Consumer Price Index (CPI) easing to 3.5% year-over-year from 4.2% and falling below the 3.8% market consensus, primarily due to lower energy prices. Core CPI also softened more than anticipated, reaching 2.6% year-over-year from 2.9%, while monthly core inflation remained flat. This softer inflation print led markets to largely unwind July rate hike pricing and scale back some expectations for Federal Reserve tightening this year.