UK June Consumer Price Inflation (CPI) came in at 7.9% – down from 8.7% in May.

Markets reacted strongly – with rates down and stocks up.

But core inflation (excluding energy and food) only fell 0.2% – from 7.1% to 6.9%.

Energy prices contributed significantly to June’s headline inflation rate decline – with petrol and diesel down 23% on the year.

All this provides for a risk that the markets have overreacted to the headline data – and there is a risk that inflation continues to be sticky. Which then needs higher rates than the markets are currently pricing.

For issuers who consider this to be a risk, now may present an opportunity to lock in rates and reduce their own risk.