June CPI Just Killed the Rate Hike Fear
For two weeks the market argued over one thing: would the Fed hike or cut? Fear of a rate hike sat over every session. The June CPI report just took that fear off the table.
June CPI actually fell 0.4% for the month, real deflation, against expectations of only a slight dip and a positive reading before. The year-on-year rate dropped to 3.5% from 4.2% in May. Cooling energy prices after the Iran ceasefire did much of the work. Inflation is still above the Fed’s 2% target, so the job is not finished, but the direction was enough to kill the hike story cold.
With that fear lifting, watch where the money runs hardest: the semiconductors. The Philadelphia Semiconductor Index, often called the fourth index because it leads even NASDAQ, is up an astonishing 125% over the past year against NASDAQ’s 29%. It set a fresh high on June 22, weeks after NASDAQ’s June 1 peak, so it is still climbing. The common way in is the SOXX and SMH ETFs, both led by Nvidia and TSMC.
The one warning: a 125% year in an index, not a single stock, is the definition of an extended, crowded trade. One soft inflation month is not a trend, and prices are still well above 2%. The group leading the market higher is also the one with the most air beneath it.
The focus of the market today: cooling inflation cleared the path, and the semiconductors out front are running fastest, with the least cushion if the mood turns.
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US Stock Express 20260715 PHLX SMH SOXX Inflation
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.
About the Author
Daniel Yue has been an active investor since 1980, with experience spanning stocks, currencies, futures, metals, and bonds. A scholar of the Chicago School of Economics, he holds a Certificate with Distinction from Cambridge University and a degree in International Trading from National Taiwan University. He served as Chief Analyst for over 30 years and Chief Mentor at Sincere Finance. In 2017, he received an award from the University of Arizona for financial internship leadership.
The analysis and opinions expressed in this article are for educational purposes only and do not constitute financial advice. Investing involves risk. Please consult a qualified financial advisor before making investment decisions.