July CPI Report Leaves Markets on Edge Ahead of Fed Decision

The July US jobs report showed an unexpected decline of 23,000 jobs, and market pessimism remains elevated. The economy is now awaiting the release of the July Consumer Price Index (CPI) report, which could have a significant impact on the Federal Reserve's decision to raise interest rates in September.

According to CME FedWatch data, there's a 52.1% chance the Fed will hold rates steady in September and a 47.9% probability of a rate hike. This division has left markets on edge, as investors await the July CPI report to determine the direction of interest rates.

Wall Street's base case is expecting a relatively soft inflation print, with a forecasted rise of 0.12% in headline inflation to 3.4%. However, if the actual numbers deviate from this expectation, it could have far-reaching consequences for risk assets, including Bitcoin.

A hotter-than-expected CPI reading could strengthen the case for another Fed hike and put renewed pressure on stocks, bonds, and crypto. The July CPI report is expected to be released on Wednesday, leaving markets with very little room for error.