Tomorrow 20:30, the U.S. will release July CPI data
The market expects headline CPI year over year at 3.4%, a slight decline from the previous 3.5%.
Core CPI year over year is expected to be 2.5%, with a monthly change forecast of 0.2%.
CME interest rate futures show the odds of a rate hike are close to a 50-50 split.
If the data deviates even slightly, the market could dramatically change.
A statement from Nick Marros, a reporter favored by the Fed:
July CPI is the most important and most decisive “card” before this meeting.
Inflation is still on the strong side, with hawkish pressure dialed up to the max, and the Fed is likely to keep the option of further rate hikes.
If inflation cools, it can largely suppress hawkish rate-hike expectations.
JPMorgan lays out the script.
If core CPI month over month is above 0.3%: extremely hawkish—inflation expectations explode, and global growth assets come under pressure.
If 0.2% to 0.3%: inflation above expectations—markets may weaken and become volatile.
Around 0.2%: in line with expectations.
If 0.15% to 0.2%: inflation clearly cools—risk assets rebound.
Below 0.15%: super-dovish—rate-hike expectations fade, and the market enters a recovery/repair phase.
There are clear hawkish divisions within the Fed.
Three officials have already cast direct votes in favor of a rate hike for this meeting.
The Fed is fully data-dependent, with zero pre-judgment and zero early signaling.
Everything hinges on the latest inflation data to guide policy, and the data will be given greater weight.
Views among major investment banks are split.
Bank of America warns: don’t be fooled by the recent weakness in nonfarm payrolls.
As long as inflation resilience remains, a September rate hike is still possible.
Citigroup believes: as long as CPI falls as expected, a September rate hike can basically be ruled out.
The market has no unified direction—waiting for CPI to deliver the answer.
In the past two days, U.S. Treasury yields have repeatedly swung back and forth.
Nasdaq futures have continued to trade in a narrow range.
Funds are locked in and observing, waiting for tomorrow night’s data to land.
Three ultimate scenarios.
Data beats expectations: stubborn inflation boosts rate-hike expectations; the U.S. dollar and Treasury yields strengthen, and pressure mounts on the tech growth sector.
Data matches expectations: balance between bulls and bears—markets continue to churn, awaiting PPI and PCE data to confirm the trend.
Data comes in below expectations: inflation cools, rate-hike expectations cool; tech growth and gold benefit, and risk assets overall rebound.
The market expects headline CPI year over year at 3.4%, a slight decline from the previous 3.5%.
Core CPI year over year is expected to be 2.5%, with a monthly change forecast of 0.2%.
CME interest rate futures show the odds of a rate hike are close to a 50-50 split.
If the data deviates even slightly, the market could dramatically change.
A statement from Nick Marros, a reporter favored by the Fed:
July CPI is the most important and most decisive “card” before this meeting.
Inflation is still on the strong side, with hawkish pressure dialed up to the max, and the Fed is likely to keep the option of further rate hikes.
If inflation cools, it can largely suppress hawkish rate-hike expectations.
JPMorgan lays out the script.
If core CPI month over month is above 0.3%: extremely hawkish—inflation expectations explode, and global growth assets come under pressure.
If 0.2% to 0.3%: inflation above expectations—markets may weaken and become volatile.
Around 0.2%: in line with expectations.
If 0.15% to 0.2%: inflation clearly cools—risk assets rebound.
Below 0.15%: super-dovish—rate-hike expectations fade, and the market enters a recovery/repair phase.
There are clear hawkish divisions within the Fed.
Three officials have already cast direct votes in favor of a rate hike for this meeting.
The Fed is fully data-dependent, with zero pre-judgment and zero early signaling.
Everything hinges on the latest inflation data to guide policy, and the data will be given greater weight.
Views among major investment banks are split.
Bank of America warns: don’t be fooled by the recent weakness in nonfarm payrolls.
As long as inflation resilience remains, a September rate hike is still possible.
Citigroup believes: as long as CPI falls as expected, a September rate hike can basically be ruled out.
The market has no unified direction—waiting for CPI to deliver the answer.
In the past two days, U.S. Treasury yields have repeatedly swung back and forth.
Nasdaq futures have continued to trade in a narrow range.
Funds are locked in and observing, waiting for tomorrow night’s data to land.
Three ultimate scenarios.
Data beats expectations: stubborn inflation boosts rate-hike expectations; the U.S. dollar and Treasury yields strengthen, and pressure mounts on the tech growth sector.
Data matches expectations: balance between bulls and bears—markets continue to churn, awaiting PPI and PCE data to confirm the trend.
Data comes in below expectations: inflation cools, rate-hike expectations cool; tech growth and gold benefit, and risk assets overall rebound.
