U.S. inflation data today: Janet Mui remains ‘cautious’ on S&P 500

S&P 500 opened up this morning after the U.S. Bureau of Labour Statistics said inflation continued to decelerate in June.

Pro shares her view on the S&P 500 index

Versus a year ago, consumer prices were up 3.0% last month versus the Dow Jones estimates for a 3.1% increase.

Still, Janet Mui – the Head of Market Analysis at RBC Brewin Dolphin remains cautious on the benchmark index. On CNBC’s “Worldwide Exchange”, she said today:

Year-to-date rally has been pretty strong. You need a pretty perfect economic situation, which is a soft landing, inflation coming down to 2.0%, and Fed cutting rates. That’s quite unlikely.

Mui is convinced that that the U.S. economy will slide into a recession in the first half of 2024. At writing, the equities market is up more than 17% versus the start of this year.

Why else is Mui cautious on U.S. equities?

For the month, consumer prices came in up 0.2% for June versus 0.3% expected.

Core inflation excluding food and energy was up 4.8% for the year and 0.2% for the month – both better than economists’ expectations. But Mui added today on CNBC:

The yield curve is heavily inverted. We think the risk-reward of increasing equities at this stage, it is tempting to chase a rally, but we don’t think it is worth doing it at the moment.

In June, the U.S. Federal Reserve skipped a rate hike (read more) after raising for ten times straight. Its next policy meeting is scheduled for the final week of this month.