The latest U.S. inflation data showed core inflation at 2.5% year-over-year in July, matching the slowest pace since March 2021, according to Bureau of Labor Statistics data released Wednesday. Core CPI, which excludes volatile food and energy prices, increased 0.2% month-over-month, showing continued moderation from previous months. Overall consumer prices rose 0.1% from the prior month and 3.4% from a year earlier, with the report suggesting that the impact of the energy-price shock from the Iran war continued to fade in July. Market participants are now pricing in a 44% probability that the Federal Reserve would hike interest rates at its upcoming September meeting, down from 48% odds before the inflation report, according to the CME FedWatch Tool. This represents a significant decline from the 55% chance that was previously priced in, and a substantial shift from the 67% chance that was priced in just a week ago. The likelihood of a rate cut at the September FOMC meeting has decreased from 65%, with an equal split now: 50% anticipating no change at the current rates of 3.5%-3.75%, and the other half expecting a 25 basis points rate hike. US stock futures rose and Treasury yields were little changed as investors pared bets on a September rate hike following the subdued inflation data.
The latest U.S. inflation data landed exactly where economists expected, removing the immediate risk of an upside surprise and keeping cryptocurrency investors focused on what the Federal Reserve does next, as reported by CoinDesk. The Bureau of Labor Statistics reported Wednesday that the Consumer Price Index (CPI) rose 3.4% year-over-year in July, matching consensus estimates while slowing from June's 3.5%. Core CPI, which excludes volatile food and energy prices, also met expectations at 2.5% year-over-year, down from 2.6% previously, according to the latest data. Economists broadly expected headline inflation to cool to 3.4%, while core inflation was forecast to ease to 2.5% after June's surprisingly soft report. Headline CPI rose 0.1% month-over-month in July, compared with economists' forecast for a 0.1% increase and June's 0.4% decline, as reported by Investing.com. Core CPI increased 0.2% monthly, matching forecasts and showing an unchanged reading from June. Because the figures aligned with expectations, investors are likely to shift their attention from the headline numbers toward what they mean for future monetary policy rather than reacting to an unexpected inflation shock.
Oil has spent the days since Friday's payroll shock quietly putting part of the September tightening story back together, as reported by Investing.com. The rebound in crude has been rebuilding the inflation premium that the weak employment data initially dismantled, pushing September pricing back toward roughly a coin toss. Goldman Sachs expects July core CPI around 0.19% month-on-month, essentially consensus with shelter continuing to provide an important disinflationary anchor. Owner-equivalent rent is expected around 0.23% and primary rent around 0.16%, consistent with the broader slowdown in underlying housing inflation. The component mix remains reasonably friendly, with Goldman expecting used-car prices to rise 0.5% and new vehicles 0.1%, while auto insurance declines another 0.5%. However, airfares are expected to rise around 2% in July, reflecting the rebound in jet fuel prices, while hotel prices should decline around 1% as World Cup-related price distortion continues to reverse. The market reaction looks asymmetric: an in-line or slightly soft print can dismantle some of the premium oil has rebuilt, while a hot print would put the September hike firmly back in play.
The S&P 500 posted its first all-time closing high in two months this week, gaining 5.75% over a four-session stretch ending Tuesday, according to reports from The Economic Times. The benchmark index was propelled by technology and semiconductor shares that had previously stumbled during record peaks. The recent market upturn has pushed the S&P 500's year-to-date gain to more than 13% as of Thursday, with the rally driven by strong corporate earnings that are exceeding forecasts for a second consecutive quarter. As per The Economic Times, the rally lifted the benchmark S&P 500 to all-time highs this week, with the index posting its biggest four-day surge since April 2025. The Nasdaq Composite is on track to finish nearly 5% above last Friday's level, helped by a rebound in semiconductor shares after July's selloff. With nearly 90% of S&P 500 results in, Bank of America data shows earnings per share up 30% year-on-year, with AI stocks posting median growth of 28% against 12% for the rest of the index. However, Investing.com notes that the Philadelphia Semiconductor Index remains more than 15% below its late-June high despite being up more than 70% this year, telling you how violent the round trip has been.
The U.S. lost 23,000 jobs in July, according to the federal government's monthly jobs report, marking a decline from 57,000 jobs added in June, as reported by ABC News. The unemployment rate fell slightly from 4.2% in June to 4.1% in July, the Bureau of Labor Statistics (BLS) said, but only because labor force participation slid to 61.4% from 61.5%. The lackluster figure recorded in July departs from largely resilient performance for the labor market so far in 2026, despite a historic oil shock that has driven up fuel prices and hiked supply-chain costs for a host of other goods. The U.S. added an average of 92,000 jobs per month over the first half of 2026, U.S. Bureau of Labor Statistics data showed, marking an improvement from an average of about 7,000 jobs lost per month over the second half of 2025. Initial jobless claims for the week ending July 31 rose slightly to 199,000, still below 200,000 for a third straight week, with the four-week average at 198,800, near the lowest since 2022.
