The U.S. labor market just delivered a stronger signal than many expected. Nonfarm payrolls increased by 162,000 in August, while unemployment remained at 4.1%. Wage growth also stayed firm, with average hourly earnings rising 0.3% MoM and 3.1% YoY. Now all eyes are on CPI.
July headline CPI was 3.4% YoY, while Core CPI stood at 2.5%. For August, the market is watching for Core CPI around 2.4% YoY and 0.2% MoM, while headline CPI is expected to rise 0.4% MoM. The official BLS release comes at 8:30 AM ET on September 11.
My view: the combination of stronger payrolls and a hotter-than-expected CPI would strengthen the case for the Fed to stay hawkish, potentially increasing expectations for another rate hike. A softer CPI, especially at the core level, would change that narrative quickly. For markets, I’m watching gold and risk assets closely. Hot CPI could strengthen the dollar and pressure gold, stocks and crypto; softer inflation could produce the opposite reaction. This CPI print could set the tone heading into the next Fed decision. What’s your call: rate hike or hold? Bullish or bearish after CPI? #cpiwatch $XAU $VOO.ETF $NVDA