Key Takeaways
- US Headline CPI cooled to 3.4% year-over-year in July, matching economist expectations and down slightly from 3.5% in June.
- Core CPI, which excludes volatile food and energy costs, slowed to 2.5% annually, providing the Federal Reserve with evidence of continued moderation in underlying price pressures.
- OPEC lowered its global oil-demand forecast for the second time in recent months, citing stalled negotiations over the Strait of Hormuz and broader market uncertainty.
- The Japanese Yen held steady at 159 per dollar following the inflation data, as markets weighed the likelihood of future Fed rate cuts against a backdrop of sticky service costs.
- Geopolitical tensions in the Red Sea intensified as reports surfaced that Saudi crude shipments are disabling tracking data to avoid Houthi attacks.
The US Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 0.1% month-over-month in July, hitting the consensus estimate. On an annual basis, inflation moderated to 3.4%, down from 3.5% in the previous month. While the data shows a cooling trend, inflation remains significantly above the Federal Reserve's 2% target, keeping the central bank in a cautious stance.
Core CPI, a metric closely watched by policymakers, increased 0.2% for the month and 2.5% year-over-year. The "Supercore" measure—which tracks services excluding energy and housing—saw a monthly increase of 0.189%, a reversal from the previous month's contraction of -0.206%. Analysts noted that while shelter and service costs remain "sticky," the overall report provides a sigh of relief for markets fearing an inflationary rebound.
In the energy sector, OPEC once again reduced its outlook for global oil demand. The organization cited ongoing uncertainty surrounding the Strait of Hormuz and stalled diplomatic talks as primary headwinds for the market. Simultaneously, security concerns in the Red Sea have forced Saudi Arabian crude tankers to "go dark" by disabling ship-tracking transponders to navigate past Houthi rebels in Yemen.
Corporate news saw significant volatility as CoreWeave shares surged following a robust earnings report that exceeded analyst expectations. The company, a major player in AI infrastructure, has become a bellwether for the strength of the artificial intelligence sector. Conversely, TikTok made headlines by ordering its US-based staff to return to the office five days a week starting next month, marking one of the strictest return-to-office mandates in the tech industry.
In the financial technology and betting space, the Wall Street Journal reported that New York City has launched a probe into prediction markets Polymarket and Kalshi. The investigation comes amid increasing regulatory scrutiny of decentralized and event-based betting platforms. Meanwhile, in the currency markets, the Japanese Yen maintained its recent gains, trading at 159 per dollar as the "in-line" US inflation data failed to spark a major rally in the greenback.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.