- US stock futures were little changed in premarket trading, with Nasdaq futures rising 0.6% as investors awaited the July inflation report.
- The July CPI is forecast to rise 0.1% month-over-month and 3.4% year-over-year, following a 0.4% decline in June, the first drop in six years.
- Traders are pricing in a roughly 50-50 chance of a Fed rate hike in September, influenced by the upcoming CPI data.
- In June, the CPI fell by 0.4%, marking the first decline in six years, which has contributed to expectations for a moderate increase in July.
- Gasoline prices have decreased from an average of $4.609 a gallon in May to $4.064 in July, contributing to the anticipated CPI increase.
US stock futures rose slightly as investors prepared for the July inflation report, which is anticipated to show a 0.1% increase in the Consumer Price Index (CPI). This follows a 0.4% decline in June, marking the first drop in six years.1235
The CPI is projected to have increased 3.4% year-on-year, down from 3.5% in June, reflecting a decline in gasoline prices, which averaged $4.064 a gallon in July compared to $4.184 in June. Gasoline prices have dropped from an average of $4.609 in May.67
Core inflation, excluding food and energy, is expected to rise 0.2% month-over-month, translating to a 2.5% year-on-year increase. This increase is attributed to rebounds in prices for used cars, trucks, and education goods. However, some economists remain cautious, suggesting that benign core CPI readings may not be reflected in the core PCE price measure, leading to expectations of a potential Fed rate hike in September.4
Stephen Juneau, a U.S. economist at Bank of America Securities, stated, “A report in line with our expectations would strengthen the case for the Fed hiking in September.” As of Tuesday, traders were pricing in a 50-50 chance of a rate hike in September, with inflation concerns driving up global bond yields.
In the U.S., the 30-year Treasury yield remained at 5.24%, while ongoing tensions in the Middle East continue to impact inflation and yields.
“Economists forecast core CPI to rise 0.2% month-over-month, translating to a 2.5% annual gain, with rebounds in used car and education prices. Meanwhile, traders price a roughly 50-50 chance of a September Fed hike, and Middle East tensions keep Brent crude near $90 a barrel.”
Yahoo Finance
