US Rate Hike Odds Plummet as Markets Digest Benign Inflation Data

Last week's Consumer Price Index (CPI) data was more benign than expected, and as a result, markets have scaled back Federal Reserve rate hike expectations. The odds of a September hike now stand at just over 30%, down from 50% before the release.

With a relatively quiet calendar until Jackson Hole Economic Policy Symposium later this month, volatility is likely to be lower. However, early next month will bring jobs and inflation data ahead of the September Fed meeting, which could potentially change market expectations.

The S&P PMIs are also due out this week, with consensus expecting a marginal softening. While these indicators should remain in expansionary territory, they may not have a significant impact unless there is a substantial downside surprise.