Morning mood: cautiously optimistic
Wall Street is heading into Thursday with a classic mixed-signal breakfast: inflation came in right on target, futures are green-ish, and the Middle East is still serving up enough drama to keep oil traders glued to their screens. That’s how you get a market that looks upbeat without exactly dancing on the table.
The inflation plot twist
Wednesday’s CPI landed exactly where economists expected it, with core CPI up 2.5% year over year. That may sound boring, but boring is beautiful when you’re trying to convince the bond market that inflation isn’t about to sprint back into the room wearing a fake mustache.
Rates responded accordingly:
- 2-year Treasury yields slipped to 4.18%
- 10-year yields eased to 4.66%
Translation: investors are getting a little more comfortable that the inflation story isn’t re-accelerating, especially even with energy prices still hanging around the high end.
But geopolitics still has a seat at the table
The market isn’t trading in a vacuum. Reuters reported that a senior Iranian source said there has been “absolutely no progress” on reviving an interim peace deal with the U.S., and the Strait of Hormuz situation is still far from settled. Brent crude near $88 and WTI around $83 are the kind of numbers that remind you the oil market can ruin a calm morning in about 12 seconds.
What traders are watching next
The next big test is today’s July PPI and ex-food & energy PPI release at 8:30 a.m. ET. If those numbers also come in tame, the “cooling inflation” crowd gets another bragging point. If not, the market may have to do that awkward pivot where it pretends it was never that excited in the first place.
Meanwhile, the AI trade is still doing its thing, with data-center demand helping lift names like CoreWeave, Super Micro, and Lumentum in the background. And later today, investors will also get earnings from Applied Materials, Brookfield, and JD.com — because apparently the market wanted one more thing to juggle.
Big picture: stocks are starting the day with a slight tailwind, but the real question is whether soft inflation data can keep beating back rate fears, energy noise, and geopolitical stress all at once.