The market generally expects July's CPI year-on-year to slightly rise to 2.7%-2.8% (June was 2.7%), with core CPI year-on-year possibly rising to 3.0%, reaching a six-month high.
This forecast reflects two opposing forces: declining energy prices (especially crude oil) suppressing overall inflation, while tariffs on imported goods such as furniture and clothing continue to push up core inflation. The Cleveland Fed model further estimates that CPI will only grow 0.16%-0.20% month-on-month, indicating a slowdown in short-term inflation momentum.
If the actual CPI unexpectedly falls below 2.7%, it may be seen as a signal of "tariff desensitization," benefiting risk assets; conversely, if it exceeds 2.8%, it will intensify market concerns about "stagflation structure solidification." Despite the recent weak non-farm employment (July increased by 73,000, with the previous two months revised down by 258,000) calling for easing, stubborn core inflation is making it difficult for the Federal Reserve to balance between "job preservation" and "inflation prevention." The market is also cautious in this regard, with CME data showing that the probability of a rate cut in September has dropped from 90% a week ago to 84.9%.