The Consumer Price Index (CPI) data for July in the United States is about to be released, and the market generally expects inflation levels to rise slightly. Analysis indicates that the overall CPI may increase by 2.8% year-on-year, while the core CPI may reach 3.1%, setting a new high in recent months. This increase is mainly attributed to the impact of tariff policies on commodity prices.

Although inflation indicators show an upward trend, the financial market strongly anticipates that the Federal Reserve will cut interest rates in September. Currently, the market expects a probability of over 95% for a 25 basis points rate cut. However, there are differences within the Federal Reserve regarding the direction of policy. Some officials emphasize the weakness in the job market, supporting easing policies; others are concerned about the persistence of inflation, leaning towards caution.

This CPI data will serve as an important indicator for assessing the impact of trade policies on the consumption side. It is expected that the direct impact of tariffs may cause the core CPI to rise by approximately 0.12 percentage points month-on-month. However, the digestion of corporate inventories may limit the sustainability of this impact.

The market's reaction to the CPI data may be quite sensitive. If the month-on-month increase in core CPI exceeds 0.4%, it could trigger a significant drop in the stock market; conversely, if it is below 0.25%, it may boost risk assets.

In the long term, some institutions expect the core CPI to fall back to around 2.5% by the end of the year. However, if inflation in the service sector accelerates, it may strengthen the market's expectations for interest rate hikes.

Overall, the July CPI data may further consolidate the economic pattern of 'moderate inflation but weak employment', making a rate cut by the Federal Reserve in September the most likely option. However, if the data significantly exceeds expectations, it may exacerbate policy differences among decision-makers. This upcoming data will provide important economic guidance for market participants and policymakers.