Stocks were strong out of the gate – after a nice late-day surge yesterday – following tamer inflation data. More on that in a minute.

Gold and silver also popped on the data, while the dollar fell. Treasuries were rallying, led by the short end of the curve on “less Fed” bets.

On the news front…

Wall Street got the kind of inflation data it was hoping for! Both the headline and core Consumer Price Index (CPI) rose only 0.2% in June, lower than the 0.3% readings economists were expecting. The monthly core CPI increase was also the smallest since August 2021. Year-over-year headline inflation fell to +3%, while core inflation dropped to +4.8%.

Within the report, there was also a big decline in used car prices at -0.5%. Shelter cost inflation slowed to 0.4%. Both are important because auto and housing cost increases were key drivers of Main Street inflation. The interest rate markets de-priced the potential for more aggressive Federal Reserve rate hikes later in 2023 in the wake of the news.

Meanwhile, chatter over the curve continues. The yield curve, that is. Typically when the yield on the 10-year Treasury falls sharply below the yield on the 2-year Treasury – a so-called yield curve “inversion” – it’s a harbinger of recession. But while the curve inverted roughly a year ago...after flattening notably for a few quarters before that...recession is still MIA. This piece discusses the conundrum and what it means for investors.

Microsoft (MSFT) got the federal court ruling it was looking for yesterday. A judge ruled against the Federal Trade Commission (FTC), which was trying to block Microsoft’s acquisition of videogame company Activision Blizzard (ATVI) due to competitive concerns. The deal was announced a year and a half ago, and this milestone pushes it closer to the finish line (though a UK ruling is still pending).

Finally, Bank of America (BAC) got slapped with a hefty $150 million penalty by the Consumer Financial Protection Bureau. The government accused BAC of hurting “hundreds of thousands of customers over a period of several years” by charging excessive overdraft fees, opening fake accounts, and failing to award credit card perks. The bank said it stopped assessing the fees in question for 18 months ago.