June CPI In-Line with Consensus

June CPI, which was in-line with the consensus and higher than our estimate, may dampen the hopes of a QE3 just a bit.  However, with the S&P futures up 5.50, the market appears to be expecting some magic words and/or promises from Bernanke while giving his semiannual report to the Senate Banking Committee this morning.

• June CPI came in at no change from July; in-line with the consensus, and above out -0.8% estimate. 
• Y/Y change was 1.7%; 10bps above expectations, and 90bps higher than our estimate. 
• Core CPI, which excludes food and energy prices, increased 0.2% and 2.2%, m/m and Y/Y, respectively.

Deflationary pressure due to disappointing economic growth along with lower energy prices appears to be less significant than we originally expected.  Regarding the energy index specifically, gasoline prices may be bottoming out as June's monthly decline was only 2%, compared with a decline of 6.8% in May and 2.6% in April.

June production and capacity utilization numbers will be released at 9:15am, followed by the NAHB (National Association of Home Builders) housing market index at 10am.