Inflation Data Eases Rate Hike Bets Amid Global Market Steadiness

US inflation data for July brought no major surprises to markets and provided investors with brief relief. The annual headline and core inflation rates slowed in line with expectations, although the monthly increase in core prices was slightly higher than forecast.

The release of the consumer price index saw market participants lower their estimates of the likelihood that the Federal Reserve would raise interest rates next month, to below 50%. Short-term US Treasury bonds also received some support, while 10-year debt securities were issued at their highest yield in nearly two decades.

However, the July report is unlikely to be the decisive factor for the Fed's future policy. Data on US producer prices are due to be released as early as August 13 and include important components of the PCE index, such as air travel cost indicators.