This morning, the government reported that consumer prices rose 0.7% in May, which was slightly above the consensus of 0.6%. The big news, however, was on the “core rate,” which excludes volatile food and energy prices.

The core rate of inflation for May edged up just 0.1%, which was below the 0.2% expected by economists. The actual rise was 0.149%, but it’s still excellent news for the market. The bulls are in command today and I believe that the Federal Reserve will cut interest rates before the end of the summer.

The year-over-year core inflation rate is now down to just 2.2%. To show you how much things have change, last September, it got up to 2.9%. The Fed still believes that inflation is public enemy #1, but it looks like inflation is not the threat it once was.