Inflation Report Set to Decide Fed's Interest Rate Move

The US Federal Reserve is facing a critical moment in its rate-setting decision this month. The August Consumer Price Index (CPI) report, due on Friday, will play a key role in determining the Fed's move on interest rates. Economists expect a 0.4% rise in the headline number, keeping the annual rate at 3.4%. However, a hot inflation report could cement an FOMC rate hike later this month.

According to SA analyst Damir Tokic, the Fed is facing late-cycle dynamics with a strong labor market and high inflation. He suggests that the Fed should consider inverting the yield curve or hiking above 5% starting with a September hike to address these concerns.

In contrast, Oracle's earnings report on Thursday will provide insight into the company's hyperscaler revenue versus capex strategy. The consensus is for EPS of $1.74 on revenue of $19.13B. However, SA analyst JD Research notes that despite infrastructure buildout risks, Oracle's software business and multi-cloud AI database are delivering strong growth.

In other news, Apple's Wednesday product launch event may be its most significant in nearly a decade. The company will unveil the iPhone Fold (Ultra?) alongside what are likely to be the broadest and most significant price hikes in company history.