TLDR
- Consumer Price Index for July releases Tuesday, expected to show headline inflation rising to 2.8% annually from 2.7% in June
- Federal Reserve officials increasingly favor rate cuts after weak jobs report, with potential September decision looming
- Trump nominated Stephen Miran to Fed Board, which could add pressure for rate cuts with multiple dissenting votes possible
- Tech earnings from Cisco, CoreWeave, and Circle will provide insights into AI infrastructure spending and cryptocurrency developments
- Retail sales data Friday expected to show 0.5% increase in July, though growth may come mainly from auto sales
The Federal Reserve faces mounting pressure to cut interest rates as new inflation data approaches this week. Market participants will closely watch Tuesday’s Consumer Price Index release for July, which economists expect to show headline inflation rising to 2.8% annually from June’s 2.7% reading.
Core inflation, which excludes food and energy prices, is projected to increase to 3% year-over-year in July. This represents an uptick from the 2.9% recorded in June. Monthly core price increases are forecast at 0.3%, above the previous month’s 0.2%.
Recent tariff implementations under the Trump administration are driving much of the inflationary pressure. UBS senior economist Alan Detmeister projects core CPI will climb from 2.9% in June to 3.5% by year-end as tariff effects continue.
Federal Reserve officials have shifted their stance following weak employment data. Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee, and Atlanta Fed President Raphael Bostic are scheduled to speak this week. Their comments could provide clarity on the central bank’s September meeting plans.
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President Trump’s nomination of Stephen Miran to the Federal Reserve Board adds another layer to the rate cut discussion. Miran currently serves as chair of the president’s Council of Economic Advisers. His potential appointment could create additional pressure for rate cuts.
JPMorgan chief US economist Michael Feroli noted that Miran’s presence could lead to at least three dissenting votes if rates remain unchanged at the September meeting. Fed governors Chris Waller and Michelle Bowman have already dissented on recent decisions to hold rates steady.
Tech Earnings Focus on AI and Crypto
Several technology companies report earnings this week, offering insights into artificial intelligence infrastructure spending and cryptocurrency market developments. Cisco Systems reports Wednesday after previously showing strong results driven by AI infrastructure demand.
Cloud computing firm CoreWeave, backed by Nvidia, announces second-quarter results following news of a $6 billion investment in a Pennsylvania data center. The company’s stock received a boost from this announcement.
Circle Internet Group reports Tuesday as stablecoin markets benefit from new regulatory clarity. The company’s shares have surged over 400% from their June initial public offering price. This follows July’s passage of the GENIUS Act, which provides a legislative framework for stablecoins.
Other companies reporting include semiconductor equipment maker Applied Materials, nuclear energy provider Oklo, construction equipment maker Deere, and restaurant chain Cava. These earnings could provide broader insights into economic conditions across different sectors.
Consumer Spending Data Expected Friday
Friday brings July retail sales data, with economists forecasting a 0.5% monthly increase. This would represent a slight slowdown from June’s 0.6% gain. However, much of the expected growth may come from volatile auto sales rather than broader consumer spending patterns.
RBC senior US economist Michael Reid expects the retail sales control group, which excludes volatile categories and feeds into GDP calculations, to show just 0.1% growth. This suggests underlying consumer spending may be weaker than headline numbers indicate.
Consumer sentiment data for August is also scheduled for Friday release. The University of Michigan preliminary reading is expected to reach 62.1, up slightly from July’s 61.7. This data will show how consumers view current economic conditions and inflationary pressures.
Markets have priced in multiple rate cuts this year following recent economic data. The S&P 500 rose 2.5% last week while the Nasdaq Composite hit fresh record highs with a nearly 4% weekly gain.
CoreWeave reports earnings Tuesday following its recent announcement of a $6 billion Pennsylvania data center investment that boosted its stock price.
Final Thoughts
As inflation data and economic indicators roll in this week, the Fedās decision on rate cuts could hinge on conflicting signals from inflation, jobs, and consumer spending. With tech earnings in the spotlight and retail sales data due Friday, markets are bracing for crucial insights that could shape future policy moves.
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