🚀 US inflation at 3.5%

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Market Overview
Read time 1.4 minutes

Year To Date Performances:

1. U.S. consumer prices fell a seasonally adjusted 0.4% in June, dragging the annual inflation rate down to 3.5% from 4.2% in May and marking the sharpest monthly decline since April 2020. Wall Street had anticipated a milder cooling to a 3.8% annual rate. This unexpected relief was driven by a 5.7% drop in energy costs, alongside flat core inflation—which excludes food and energy and held steady at a 2.6% annual rate. While the softer data led traders to slash the probability of near-term rate hikes, Federal Reserve officials, including the newly appointed Chairman Kevin Warsh, maintain a cautious stance, emphasizing that it will take several months of consistent progress to ensure inflation is firmly on track toward their 2% target.

2. IBM shares fell 23% on Tuesday after the technology giant unexpectedly released preliminary second-quarter financial results that fell short of Wall Street's expectations. The company reported adjusted earnings of $2.93 per share on revenue of $17.2 billion, missing analyst forecasts of $3.01 per share on revenue of $17.86 billion. IBM CEO Arvind Krishna attributed the disappointing quarter to soft execution and a sudden capital expenditure shift, as clients rapidly redirected their late-June software and infrastructure budgets toward securing supply-constrained hardware—specifically servers, storage, and memory chips—ahead of anticipated price increases. The sharp selloff highlights growing investor concern that the rapid expansion of generative artificial intelligence tools is systematically disrupting legacy enterprise software business models, with corporate buyers increasingly diverting cash away from traditional software licensing to secure hardware foundations from semiconductor giants like Micron and SK Hynix.

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4. United Airlines has announced a new premium economy upsell for its upcoming fleet of 50 Airbus A321XLR aircraft, introducing a special row in its Economy Plus section where the middle seat is permanently blocked by a fixed, shared tray table. Reminiscent of the "Euro-business" class long utilized by European carriers for short-haul flights, this new seating option will be sold later this year to provide window and aisle passengers with extra elbow room, beverage holders, and dedicated tabletop space alongside an extra three inches of legroom. The strategic move comes as major airlines aggressively slice up their cabins to monetize space—following Delta's recent launch of a basic business class that strips away lounge access and seat selection—while also offering operational benefits. By permanently capping the narrowbody aircraft's capacity at 150 passengers through the blocked seats, United gains the flexibility under FAA rules to staff certain flights with only four flight attendants instead of five, potentially yielding significant long-term labor savings even as they charge passengers a premium for the added space.

   Headlines

   1. US Treasury yields fell after the June Consumer Price Index data was released; the two-year yield is now at 4.2%.

   2. Frontier Airlines will have Wi-Fi on flights starting in 2027.

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