The June 2025 CPI report just came out, and while it mostly matched expectations, there are a couple of key things to know.
Here’s What You Missed
Headline inflation rose 0.3 percent from May, pushing the annual rate to 2.7 percent. On the other hand, core inflation, which excludes food and energy, increased 2.9 percent year over year. For months, it’s been mostly medical bills and services that have driven prices higher, but since the Trump tariffs have been put in place, there’s been more focus on the prices of goods like furniture, apparel, and toys. And as far as our expectations go, this is precisely what economists predicted.
The Market’s Reaction
Post-announcement, bond yields surged, with the ten-year inching towards 4.4 percent and the thirty-year surpassing 5 percent. This indicates a reassessment of the timeline for interest rate cuts by investors. On the equity side, the market showed early strength, which is a positive sign, even though it tapered off as the day progressed.
My Thoughts
From a policy standpoint, this report aligns with the Fed’s cautious signals over the past few weeks. Despite the higher inflation, the market’s reaction has been relatively subdued, which is a testament to the Fed’s steady hand.
Looking at the market right now, things are very overbought. Most of the tariff chaos is over now, meaning much of the unpredictability is gone. And while it seems like there’s a policy flip from Trump every week, trade deals are getting done with more on the way, particularly with the EU. This means prices may be pushed higher in the short term, so for those playing the long game, it’s time to be patient. Set your price target, stick to it, and don’t fall into the FOMO trap. Just as the market goes up, it’ll eventually come down. I simply don’t think it’s worth it to buy overpriced shares. For other assets like REITs, you’re probably better off waiting until the yield environment settles.
The Fed is in “wait-and-see” mode, and long-term investors should do the same.
Investing IQ 
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