[Economic Indicator] US July CPI Released — Came in as Expected, Easing Fears of Rate Hikes

The economic indicator that had the market on edge this week just came out tonight (around 9:30 PM our time on the 12th). The US July CPI—Consumer Price Index. There's been talk lately about how if prices go up again, the Fed might have to raise rates further, so there was real interest in today's number. To cut to the chase: it came in right as expected. Nothing shocking, everything landed smoothly, and that's taken a lot of the edge off worries about further rate hikes.

CPI, Down a Bit From Last Month

When we talk about inflation and throw around those percentage numbers, we're usually looking at headline CPI. It's up 3.4% year-over-year, which is down a notch from June's 3.5%. Month-over-month, it barely moved—just 0.1%. Core CPI, which strips out the volatile food and energy prices, came in at 2.5%, also down from June's 2.6%.

On the surface, the change isn't dramatic. But this time, the good news was simply that nothing surprising happened. If inflation had come in hotter than expected, we'd have fresh ammunition for a rate hike, but that didn't happen.

So the Market Took a Breath

The numbers hit, US stock futures jumped, and Treasury yields dropped. The rate-sensitive 2-year fell to 4.19%, the 10-year to around 4.66%. In other words, the market basically said, "Yeah, the Fed probably doesn't need to raise rates again." The odds of a September hike even fell to 42%. A major investment bank weighed in saying the market will likely stay convinced that these price levels don't call for further tightening.

For Our Market, Especially Semiconductors, This Is Good News

When pressure from US rates eases, our market typically gets some breathing room too. The dollar softens, so the won doesn't take as much pain, and foreign money that fled has room to come back. Growth stocks are particularly rate-sensitive, and semiconductors are often the first to respond in these situations. In fact, on the very same day, Micron popped over 5% in US trading, and memory chips showed real strength—worth watching because it typically flows into our SK Hynix and Samsung Electronics.

That said, let's not get ahead of ourselves. Inflation is still above the Fed's 2% target. "We've relieved some worries about hikes" doesn't mean "rate cuts are coming soon." Think of it as the direction improving, not the destination changing.

The Takeaway

The US July CPI came in as expected (3.4% headline, 2.5% core). That eased worries about further hikes, stocks rose, and rates fell. From our perspective, it was a good day on all fronts—won/dollar, foreign flows, and semiconductors. But one number doesn't settle everything. Keep an eye on upcoming data to see where this is really heading.

※ This post isn't a recommendation to buy or sell any particular stock—it's simply a summary of released economic data and how the market reacted. Any investment decisions and responsibility for them rest with you.

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