CPI Release Sets Stage for Market Volatility
The upcoming US CPI (July 2026) release on Wednesday, August 12, at 8:30 AM ET (12:30 GMT) is a critical macroeconomic event that could trigger significant volatility across various markets.
Last month's CPI report delivered a major downside surprise, with headline CPI decreasing by -0.4% MoM versus the expected decline of -0.2%, while annual inflation eased to 3.5%. Core CPI was flat MoM and stood at 2.6% YoY, below the 2.9% consensus.
For July, current expectations point toward a 0.2% MoM and 3.4% YoY headline CPI increase, while Core CPI is expected to be around 0.2% MoM and 2.5% YoY. TD Securities has a slightly different view, anticipating Core CPI of around 0.20% MoM and 2.4% YoY.
The Federal Reserve's rate outlook is particularly important, as the market expectations for a Fed hike have shifted lower following the weaker-than-expected NFP report where employment fell by approximately 23K versus the expected increase of 80K. Currently, Fed funds futures are pricing in a significant probability of rates remaining unchanged in September, with roughly 53.9% probability of a 3.50%-3.75% hold.
A hot or sticky CPI reading could strengthen the US Dollar and Treasury yields, increase Fed hike expectations, and put pressure on Gold toward the $4,300 area. Conversely, a cooler CPI print could reduce tightening expectations and provide fresh upside momentum for Gold.