June delivered the kind of inflation report the Fed dreams about — and it arrived already expired. Consumer prices fell 0.4% from May, the sharpest drop since 2020, as gas prices tumbled amid a brief ceasefire in Iran that unraveled this week. Annual headline inflation beat forecasts, cooling to 3.5%, but the relief may not last into July.

• After May’s 4.2% high, the positive report led investors to price out a July hike — as rate-hold odds jumped to 83%, up from ~60%.
• However, renewed US-Iran strikes pushed Brent crude above $86 — putting the energy-driven relief on borrowed time,

Silicon’s holdout: Not every price cooled off. Computer software costs jumped 17.4% year-over-year, a record clip fueled by the AI and data-center boom, exactly the kind of category Warsh says the Fed is now watching for spillover into inflation and jobs. AppleAAPL

is already tacking on price hikes for chip-dependent laptops, even as computer prices broadly slid 0.8% for the year. Otherwise, today’s producer price report is the next test, set to shape the Fed’s preferred PCE gauge later this month.