July CPI Comes In Exactly as Expected — Does the Fed Get Some Breathing Room?

July CPI data released Wednesday landed almost precisely in line across the board. Headline CPI rose 3.4% year-over-year, matching estimates exactly and easing slightly from the prior 3.5%. On a monthly basis it rose 0.1%, also in line, following a 0.4% decline the month before. Core CPI came in at 2.5% year-over-year against a 2.50% estimate, down from 2.60%, while the monthly reading rose 0.2%, matching the 0.20% forecast versus 0.00% previously. Traders trimmed their bets on a September Fed rate hike slightly following the release. Data that lands perfectly in line is, in a sense, the hardest kind to trade — it offers neither a cooling surprise strong enough to fuel a meaningful risk-on move, nor an upside shock that would force a repricing of the tightening path. Inflation remains on a modestly downward trajectory, and hike pressure has eased somewhat, but not by enough to fundamentally shift how the market reads the policy outlook. The complication is that US equities have been chopping around near record highs for a while now, with both bulls and bears waiting for a clear directional signal. This unremarkable CPI print probably isn't the decisive answer either side was looking for. With inflation now confirmed as reasonably tame, do you see stocks pushing to new highs from here, or continuing to consolidate at elevated levels? How are you positioning from here? Flexibly allocate across core U.S. tech equities and diversified RWA portfolios on Bitget — achieve efficient cross-asset allocation and precision risk hedging: https://www.bitget.com/promotion/futures-rwa