If I have to make a guess about tomorrow’s CPI outcome, I would lean toward CPI likely matching expectations or coming in slightly below. It probably won’t surprise to the upside.
The Cleveland Fed’s Nowcasting model forecasts that in July, overall CPI will rise only 0.09% month over month, and 3.42% year over year.
On the prediction platform Kalshi, traders think the probability of year-over-year CPI exceeding 3.4% is just 15%. Some have argued that market-implied prices are often more sensitive than survey results.
Also, there’s energy prices. In early July, retail gasoline prices fell to nearly a four-month low. Although they rebounded somewhat by month-end as tensions escalated, the full-month average still remained below June. Combined with the low base effect from June’s CPI month-over-month reading of -0.4%, overall inflation may be able to continue easing.
The most important point is this: the labor market is already showing signs of fatigue. In July, nonfarm payrolls increased by only 57,000, far below expectations, and wage growth slowed significantly. Wages are a leading indicator for service inflation—if wages can’t rise, it’s hard for core inflation to rekindle.
So the chance of a number far above expectations really isn’t that high.
What about far below expectations? June CPI already came in broadly below expectations once. The probability of two consecutive months with sharply below-forecast results is, by itself, not very high. So in the end, I think the data will neither be too good nor too bad, and will most likely land near the market’s expectation “center.”
After all, with a mild data outcome, market fluctuations, and the direction still depending on September.
For BTC, data that matches expectations would mean the probability of a rate hike in September is unlikely to swing dramatically. BTC will most likely keep trading in a range around $64,000.
The Cleveland Fed’s Nowcasting model forecasts that in July, overall CPI will rise only 0.09% month over month, and 3.42% year over year.
On the prediction platform Kalshi, traders think the probability of year-over-year CPI exceeding 3.4% is just 15%. Some have argued that market-implied prices are often more sensitive than survey results.
Also, there’s energy prices. In early July, retail gasoline prices fell to nearly a four-month low. Although they rebounded somewhat by month-end as tensions escalated, the full-month average still remained below June. Combined with the low base effect from June’s CPI month-over-month reading of -0.4%, overall inflation may be able to continue easing.
The most important point is this: the labor market is already showing signs of fatigue. In July, nonfarm payrolls increased by only 57,000, far below expectations, and wage growth slowed significantly. Wages are a leading indicator for service inflation—if wages can’t rise, it’s hard for core inflation to rekindle.
So the chance of a number far above expectations really isn’t that high.
What about far below expectations? June CPI already came in broadly below expectations once. The probability of two consecutive months with sharply below-forecast results is, by itself, not very high. So in the end, I think the data will neither be too good nor too bad, and will most likely land near the market’s expectation “center.”
After all, with a mild data outcome, market fluctuations, and the direction still depending on September.
For BTC, data that matches expectations would mean the probability of a rate hike in September is unlikely to swing dramatically. BTC will most likely keep trading in a range around $64,000.