POWER: Ib Vogt Signs Long-Term vPPA in Romania

• Core goods inflation was surprisingly soft in July at 0.21% M/M vs analyst average estimates closer to 0.4%, i.e. a very similar pace to the 0.20% M/M in June rather than a firm acceleration.
• We went into some of the main drivers for this surprise in an earlier bullet but for now, our calculation of median moderated to 0.28% M/M after a particularly strong 0.44% M/M in June. It's back at a pace similar to the 0.29% M/M in May.
• This is still a robust pace – it averaged 0.0% M/M in 2024 and 0.06% M/M in Q1 – but clearly doesn’t show any further acceleration in what would have been a sign of accelerated tariff passthrough.
• As we always caution though, see the below charts for the extent to which these individual series aren't seasonally adjusted. 

July's core % M/M CPI reading of 0.322% was in line with expectations (MNI unrounded median 0.32%), with the 0.197% M/M headline a "miss" vs 0.24% MNI unrounded median. 

• Starting with headline, both food and energy prices came in below expected (0.05% vs 0.27% exp for food; -1.07% vs -0.65% exp for energy).
• Food at  home fell 0.1% (after two months of +0.3%) but food away from home remained stubbornly high at 0.3% (after 0.3-0.4% the prior 2 months).
• Motor fuel prices fell 2.0%, in line with expectations - energy services fell 0.3% after +0.9%, led by a pullback in electricity prices (-0.1% after +1.0%).

In tandem with the move in Treasuries, USD snaps lower on the inflation print - tripped new daily lows for the greenback - in GBP/USD in particular this has prompted a new weekly high and a test at the 50-dma of 1.3502. Clearance above this level would further reverse the downleg off the late July high and put markets near 3% off the early August low.