The U.S. Consumer Price Index for June (CPI) will be released on Wednesday, followed by the Producer Price Index.

Investors are looking for signs of weakness that would justify the U.S. Central Bank changing its mind about raising interest rates by 25 basis points. The Federal Reserve paused rate hikes for the first month in over a year last month. This would lead to a return to monetary hawkishness. The Fed’s prescription helped reduce the CPI reading from 9% in 2022 to 4% in May, but it has also recently raised concerns over an overstep which could send the economy into a deep recession.

The Labor Department will release the CPI for June on Wednesday. Since the CPI’s peak last year, it has been steadily declining. The consensus of economists is that the June index will dip in the mid-3% range. However, Edward Moya senior market analyst with foreign exchange market maker Oanda wrote in a note on Monday that it could fall to 2.8%. Moya noted, however, that the core inflation rate, which excludes volatile costs such as food and energy, could continue to be high due to an expensive housing market. Moya wrote that “pricing pressures could remain throughout the summer.”

PPIs, which measure wholesale price changes, can often be a good indicator of future changes for consumers. The PPI for May fell to just 1.1%, a sharp drop from the 2.3% recorded in April. This was a far cry from expectations of a decline of 1.5%. In June, the consensus predicts a reading of 0.4%.

Unemployment Claims

The U.S. Labor Department will also announce the weekly unemployment claims for the week that ended on July 8th. Recent data on jobs has provided slightly different perspectives about the current state of employment. The ADP report from last week showed that businesses added almost half a million private sector jobs. This was more than twice what economists expected. The Fed’s unexpectedly positive results prompted it to resume its aggressive anti-inflation treatments. Strong employment suggests an expanding economy, and higher prices are often preceded by a strong job market. A slight but unexpected increase in unemployment claims on the same day, and a mild report of nonfarm employment later in the week gave a nuanced picture.

James Rubin is the editor.