Prices cool, and rate-hike fears ease

Good morning. Some welcome inflation news landed in the US yesterday. June wholesale prices fell 0.3%, the first drop in almost a year, and consumer inflation eased to 3.5% a year as gasoline got cheaper.

That softened the tone at the Fed. New York Fed chief John Williams said inflation has peaked and rates are «well positioned», which cuts the odds of a hike this month. Newly installed Fed Chair Kevin Warsh had a rougher day on Capitol Hill, admitting he meets often with the Trump administration and trading barbs with Senator Elizabeth Warren.

Stocks took their cue from the big banks. JPMorgan and Goldman Sachs posted strong quarters on a boom in mergers and IPO fees, and the Dow rose 0.3% to 52,658. IBM went the other way after missing estimates, a sign that companies may be spending on their own AI gear rather than renting outside models. Money leaving chip stocks flowed into the megacap tech names.

The worry that remains is oil. Renewed US-Iran tension pushed crude back above $80 a barrel, and traders on Kalshi see gas hitting $4 a gallon by month-end. How long the inflation relief lasts depends a lot on that.