First Tariff Impacts Emerge in CPI

• In the US, headline CPI rose 0.3% m/m in June as expected, lifting annual inflation to 2.7% from 2.4%, just above consensus. Core CPI rose 0.2% m/m and 2.9% y/y, both in line with expectations.
• Goods exposed to tariffs saw outsized gains,  household furnishings rose 1.0% (vs 0.3% in May), and appliances climbed 1.9% (vs 0.8%).
• US Treasury yields rose post-CPI, with 2-year yields up 5bps on the day (2bps above pre-release), and 10-year yields also up 5bps. Fed pricing now reflects 44bps of cuts by year-end, down from 48bps prior.
• Locally, the July Westpac-Melbourne Institute Consumer Sentiment Index rose 0.6% to 93.1. While it marks a third monthly gain, sentiment has been broadly flat since December after failing to fully recover from April’s 6% drop.