It's good news for consumers,

for markets, for all, but it's one print and we got a lot of information coming through today. Francis, Jim Bullard was also talking about the pain speech in Jackson Hole that Jay Powell gave a couple years ago when he said that essentially this is inflation that's running too hot and we are going to get inflation back down and it is going to require pain in the economy. Francis, you are expecting to see that pain. We haven't seen it on a broad base level. Do you have a sense of whether this is inflation is the immaculate type that we've been talking about or whether this is just one dot in a series where things are kind of shifting or at a tipping point. I

would hope that would be the outcome for the American people at the same time. Our leading economic indicators on the jobs front continue to show weakness ahead. We're at a 4 percent unemployment rate. I'm watching today to see from the Federal Reserve. They already had 4 percent penciled in for the end of this Are we really going to go through the next six months without an additional tick up in the unemployment rate? And let's remember the simple rule of thumb is that it takes about two years for those rate hikes to work their way through the system, and we're two years and some change after that first rate hike. We're not at the end of the impact of rate hikes. We're at the very beginning. So while magnitude of the downside for the U .S. economy is up for debate, the direction shouldn't be. There probably will be a much larger slowdown in jobs in the second half of the year, and this is when the Federal Reserve will have sufficient data to begin cutting interest rates and bringing those rates down beginning,

we think, in September. Jim, what's your take on that, given fact that it seems like something that feels like a stretch for the unemployment rate to stay where it is for the foreseeable future.

I think it is immaculate disinflation and again I think that you know by being credible and moving quickly the Fed was able to get firms to their pricing strategies quickly. The inflation came down relatively quickly. And so, you know, one simple theory about how this works would be that you, the Fed threatens recession. Everyone looks ahead. They see that that might be a possibility. They don't want to raise prices into that. And the inflation goes away relatively quickly. So that isn't the most theory around here or on Wall Street, but that is something that you have to take into account because the anticipated effects can overwhelm sort of the mechanical effects and you get lower inflation right away. So this is something I was advocating for in 2022 that we, you know, let's move quickly. Let's try to quash the inflation quickly. And this report today is

for a moment. French tenure. You stand by about seven or eight basis points. Right now, that CPI print was more important to the European bond market than anything. Macrons had to say in the last 12 hours. The

Banker the World, the reason why Jay Palace go on tour but ultimately it does highlight how this is the market that everyone is watching regardless of some of the external factors.

Ira Jersey, Bloomberg Intelligence joins us now for a little bit on this bond market. Ira the most important data point in global finance, your thoughts on this one? Yeah,

obviously better than some people had feared. know it was on the core CPI. It was a low 0 .2. So it was actually under 0 .2 percent. And I think that that's something that traders have been able to kind of grasp onto. And like you noted you know this is pulling down all global sovereign bonds at the moment where bond yields at the moment. So you look at German yields are down by six basis points. Like you said France down by seven basis points. And but but remember the beta to that is only half of what's going on here in the US where you have five year yields off 15 basis points at that one point. And that just shows that, you know, we're now going to be pricing in for two full cuts, probably before the end of the year. And then as you get additional data, obviously, the market's going to have to shift those expectations pretty dramatically.

So Ira, I have a question for you. So if you just took rebase where inflation is now and you said 0 .2 every report through the end of the year, you would get year over year core PC inflation on a 12 month basis at 2 .8 at the end of the year. So we started out at 2 .8 in January on that metric. We'd end up at 2 .8. So maybe that's not really enough. You need even better reports in order to be able to show progress through through this year.

Well I think I think I think part of it, James, is the fact that we're not increasing. So a couple of months ago when we had a couple of inflation scares, the market really dragged onto that and said, okay, what happens if the Federal Reserve doesn't cut it all this year or maybe even hikes? Because keep in mind, in January, the market was pricing for almost no chance of the Fed staying on hold this year. now we're actually pricing or were pricing I don't know where we are at the second but we were actually pricing via options on short -term interest rate futures for about a 20% chance of potential hikes by the end of the year. I suspect that when you get if you get another print similar to this where you have another bullet 0 .2 again, on the core that people will say like hey progress is being made the Federal Reserve is still more likely to remain on hold and and and or cut than they are to to be even thinking about hiking interest rates before the you 2025 at this point. So I do think that there is a sea change and it matters. And to your point, I still think that the market is going to say, okay, what's the trend versus where we were as opposed to just looking at 0 .2 forever is probably not going to be sustained.

Ira Jersey of Bloomberg Intelligence. Ira, thanks for that. Appreciate it. If you are just joining us about 13, 14 minutes ago, we got this data. 0 .0 % month -over -month headline inflation against an estimate of 0 .1, previous number 0 .3, stripping out food and energy bromo, 0 .2 % was the number, 0 .3 % was the estimate.

And Jim Bullard, former St. Louis Fed president, just moments ago saying that this is the immaculate disinflation that many people were looking for. Francis Donald is still with us. And Francis, I'd love your take on that. Do you see this as the immaculate disinflation? Can you bet on that and arrange a portfolio

around it? Well for June it feels like immaculate disinflation or for May we had this really large decline or no change in inflation month over month and a pretty good non -farm payroll number. That's exactly what this immaculate disinflation would be defined as. So now it's about what do we see next and on this front, I do see some downward momentum that is occurring in the economy but let's remember if you're sitting on a trading floor you're managing portfolios numbers like this aren't just about changing your base case it's not that something like this would make you move from a December to November or even to a September rate cut it can often be about reducing the balance of risks or the tails of the risks to your base case so this number probably isn't going to change anyone's outlook as to what will happen next. That'll be based on their forecast. But it does reduce the chance that the Fed would, if you had it in your scenarios, have to hike again or that they have to stay for a prolonged hold. So sometimes it's about reducing those fat tails on your outlook as opposed to the individual. That is tradable, but usually around the conviction of your trade or the balance of risks or how much leverage you're putting onto it as opposed to the trade itself.