US CPI Expected to Show Modest July Increase Amid Rising Data Quality Concerns

Economic

Summary:

July’s US Consumer Price Index is projected to have risen moderately, with core inflation likely posting its largest gain in six months due to tariff-driven goods price increases...

Moderate CPI Rise, Tariffs Fueling Core Inflation

Economists surveyed by Reuters expect headline CPI to increase 0.2% in July, down from June’s 0.3% pace, with lower gasoline prices offsetting costlier food and tariff-sensitive goods. Annual headline inflation is forecast at 2.8%, up from 2.7%. Core CPI, which strips out food and energy, is seen climbing 0.3% the sharpest monthly gain since January largely driven by higher prices for imported goods such as household furniture, apparel, auto parts, and toys affected by President Trump’s tariffs. The annual core rate is expected to edge up to 3.0% from 2.9%.

Tariff effects are still unfolding, with businesses selling through pre-tariff inventories limiting the immediate impact. However, Glenmede’s Jason Pride warns that as inventories dwindle, companies may pass more costs onto consumers, amplifying inflationary pressure in coming months. Food prices are also climbing due to labor shortages in agriculture following stepped-up deportations of undocumented migrants.

Data Quality Erosion Raises Investor Alarm

The CPI release comes amid mounting unease over the BLS’s ability to produce accurate statistics. Budget cuts, staff reductions, and suspended data collection in certain cities including one each in Nebraska, Utah, and New York have forced the agency to use more “different cell imputation” to fill data gaps. This method, which substitutes regional or national averages when local prices are missing, accounted for 35% of CPI data in June, up sharply from 8% a year earlier. Economists caution that while such imputations don’t necessarily introduce bias, they can heighten volatility and make CPI more sensitive to methodological changes.

Concerns intensified after President Trump fired BLS chief Erika McEntarfer earlier this month, following weak July jobs data and downward revisions to prior months’ payrolls. Critics, such as Boston College’s Brian Bethune, have labeled the situation “data terrorism,” warning that political interference could erode trust in official economic metrics.

Market Implications and Fed Outlook

If July CPI matches expectations, markets are likely to maintain bets on a September Federal Reserve rate cut, with the central bank keeping its policy rate steady at 4.25%–4.50% for the fifth straight meeting last month. The Fed relies more heavily on its preferred PCE inflation gauge, but CPI trends remain influential for market sentiment and policymaker rhetoric.

Any upside surprise in core inflation could temper the urgency for near-term easing, particularly if investors interpret the increase as tariff-driven rather than demand-led. Conversely, a softer-than-expected print would strengthen the case for policy loosening, especially amid mounting signs of slowing growth and the ongoing trade war’s drag on consumer spending power.

Source: Reuters

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Gerik

Economic

Truce Extension Fuels Risk Appetite in Asia

Japanese stocks surged to record highs on Tuesday, leading gains across Asia after Washington and Beijing agreed to extend their tariff pause by three months. The move avoided a potential escalation into triple-digit duties on each other’s goods, easing fears of a renewed trade blockade between the two largest economies. While markets had broadly anticipated the extension, its confirmation removed a near-term risk event and gave investors greater confidence in holding risk assets.

Australian equities hovered near record territory earlier in the day, supported by the tariff news and the Reserve Bank of Australia’s 25-basis-point rate cut to 3.6%, which was widely expected. The Australian dollar, however, softened as traders priced in the possibility of further easing amid signs of slowing domestic growth.

UK Labour Data in the Spotlight

In Europe, attention is turning to the UK’s latest labour and wage data. Analysts expect British pay growth in July to remain steady at 5%, a figure that will be closely scrutinized by the Bank of England (BoE) as it gauges the persistence of domestic inflation pressures. The release comes less than a week after a divided BoE voted to cut rates by 25 basis points to 4%, with four of nine policymakers opposing the move.

Hiring data released Monday painted a weaker picture, with business hiring intentions falling to their lowest levels since the COVID-19 pandemic. Recruiters also reported that starting salaries are rising at their slowest pace in more than four years. Such trends could bolster the case for further easing, but traders remain skeptical, with markets no longer fully pricing in another rate cut in 2025.

Sterling Under Pressure Despite Year-to-Date Gains

Despite a more than 7% rise in the pound this year, speculative sentiment toward sterling has shifted sharply bearish. Commodity Futures Trading Commission (CFTC) data shows that speculators now hold $2.78 billion in net short positions against the currency a rapid reversal from bullish positioning earlier in the year. The combination of slowing UK growth and already stretched valuations is weighing on investor confidence, even if rate cut expectations have moderated.

Later on Tuesday, US inflation figures will take center stage. The data is expected to provide a critical read on how the Trump administration’s tariffs and their extension to key trading partners are influencing price dynamics. A softer reading could embolden the Federal Reserve to move toward rate cuts, while a stronger print might reinforce caution.

The inflation release also comes against a backdrop of ongoing uncertainty over the global trade landscape, with the US–China extension buying time for negotiations but leaving other flashpoints unresolved, including oil-related sanctions on Russia and policy toward Chinese technology exports.

Source: Reuters

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James Whitman

Economic

Central Bank

Australia's central bank cut its policy rate by 25 basis points on Tuesday, as low inflation allows the country room to loosen its monetary policy and boost its slowing economy.

The country's benchmark rates are now at to 3.6%, their lowest since April 2023, and in line with expectations of economists polled by Reuters.

The Reserve Bank of Australia said that inflation had dropped "substantially" since the peak in 2022, with steeper interest rates bringing aggregate demand and potential supply "closer towards balance."

Inflation in Australia came in at 2.1% in the second quarter, its lowest since March 2021 and near the end of the RBA's 2%-3% range.

Tuesday's rate cut comes amid a drastically reshaped trade environment as U.S. tariffs have come into effect, as well as a less than expected growth in the first quarter.

Australia was hit with the baseline 10% tariff by U.S. President Donald Trump, with the country's trade minister reportedly hailing that as a "vindication" for the government's negotiations, adding that the country had conducted diplomacy with the U.S. in a "cool and calm" way.

The country's economy grew 1.3% year on year in the first quarter, lower than the estimated 1.5% growth in a Reuters poll. On a quarter-on-quarter basis, the economy expanded 0.2%, undershooting expectations for a 0.4% growth.

Katherine Keenan, ABS head of national accounts, attributed the soft growth to shrinking public spending and weakened consumer demand and exports.

Analysts at the Commonwealth Bank of Australia said in a Aug. 7 note that they expected a rate cut to be "locked in" for August, saying that data had evolved as expected after the RBA's unexpected hold in July.

The CBA analysts are also forecasting an additional cut for November, and also see the possibility of one more in "early 2026."

Source: CNBC

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Gerik

Economic

A Policy Shift Driven by Slowing Growth

The RBA’s latest decision continues a rapid easing cycle that began in February, when the cash rate was lowered from 4.35% to 4.1%. A second reduction in May brought the rate to 3.85%, and Tuesday’s cut takes it to 3.6%. This is the first year since the pandemic that Australia has seen three consecutive rate cuts in such quick succession, underscoring how economic priorities have shifted.

For much of 2023 and early 2024, the RBA’s focus was on combating inflation, which had surged to multi-decade highs in the aftermath of global supply chain disruptions, high energy costs, and strong domestic demand. However, recent consumer price index readings show inflation cooling toward the bank’s 2–3% target range. This has eased the pressure to maintain restrictive rates and allowed the RBA to turn its attention to weakening growth indicators.

Economic Backdrop: Inflation Easing, Demand Cooling

The central bank’s decision comes as Australia’s GDP growth slows sharply. Weak household spending, driven by high debt burdens and rising living costs earlier in the cycle, has weighed on economic activity. Labor market data shows signs of cooling, with job vacancies declining and wage growth plateauing after a period of acceleration.

At the same time, business confidence has softened, partly due to weaker global demand and uncertainty around China’s economic recovery. Given Australia’s dependence on commodity exports particularly iron ore, coal, and LNG slower growth in key Asian markets has a direct impact on national income.

Market Reaction and Outlook for the Australian Dollar

Financial markets had fully priced in Tuesday’s cut, with bond yields easing ahead of the announcement. The Australian dollar weakened modestly following the decision, reflecting expectations that further easing could follow if economic data continues to disappoint. A lower currency may offer some export competitiveness, but it could also make imports more expensive a factor the RBA will watch closely to ensure inflation doesn’t reaccelerate.

The RBA’s dovish stance contrasts with the cautious approach of the US Federal Reserve, which is weighing rate cuts but remains concerned about sticky inflation risks. In contrast, the European Central Bank has already begun gradual easing, aligning more closely with Australia’s current direction. This divergence in monetary policy paths could influence capital flows, with some investors potentially reallocating funds toward higher-yielding currencies.

Forward Guidance: A Balancing Act

Governor Michele Bullock has emphasized that while inflation is now less of a threat, policy will remain data-dependent. If economic growth weakens further particularly in the housing and retail sectors the RBA could deliver another rate cut before the year’s end. However, any unexpected rebound in consumer prices, possibly from a lower AUD or external shocks like higher global oil prices, could prompt a pause in the easing cycle.

In the months ahead, the interplay between domestic economic softness, China’s commodity demand, and global monetary trends will determine whether Tuesday’s move marks the midpoint of the RBA’s rate-cutting campaign or the beginning of a more aggressive stimulus push.

Source: AP

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IC Markets

Commodity

Stocks

Forex

Economic

US Stocks Fall Ahead of Key Inflation Update – Dow Down 0.45%

The three major US indices all fell in trading on the first day of the week yesterday as investors looked ahead to key inflation data due out later today. The Dow dropped 0.45% to 43,975, the S&P 0.25% to 6,373, and the Nasdaq fell 0.30% to 21,385. The dollar pushed higher against most of the majors, the DXY up 0.35% to 98.52, while Treasury yields edged further north — the 2-year up 0.6 basis points to 3.768% and the 10-year up just 0.2 of a basis point to 4.285%. Oil prices were steady near recent lows as traders await the key meeting of Trump and Putin later this week, with Brent up 0.14% to $66.68 and WTI up 0.16% to $63.98. Gold prices saw the most volatility, falling 1.63% to $3,341.64 by the close on an update from President Trump that tariffs would not be placed on gold bars entering the country.

Inflation Data in Focus for US Markets Today

US markets will be heavily focused on key CPI data due out early in the New York session today. Recent employment data pushed expectations for a September rate cut spiralling higher, with the market now pricing in an 86% chance of a cut at the meeting. However, today’s inflation numbers could either derail those expectations or fully lock them in if they come in off their expected prints. The headline CPI data is expected to show a 0.2% month-on-month increase, with the Core data showing a 0.3% month-on-month increase, while the year-on-year number is expected to increase 0.1% to 2.8%. Any significant deviations from these numbers will see substantial moves in the market as traders reprice Fed rate cut chances.

Busy Day Ahead Across Trading Sessions Today

It is a busy day on the macroeconomic calendar today with major events due out across all three trading sessions. The main focus in the Asian session will be on Australian markets, with the Reserve Bank of Australia due to make its latest rate call. A 25-basis point cut is fully priced in by the market, and another hold would be a major shock. However, traders are expecting volatility around the event, with forward guidance due from the statements and press conference. The initial focus in the European day will be on UK markets with employment data set to drop — the Claimant Count is set to increase by 20k, and the Unemployment Rate remain steady at 4.7%. The main event of the day, however, is due early in the New York session, with the key CPI numbers due, and traders are expecting big moves around the event however the data plays out. Later in the session, we are also scheduled to hear from Fed members Barkin and Schmid.

Source: IC Markets

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Daily News

[Quick Facts]

1. Trump nominates E.J. Antoni as the next commissioner of the Bureau of Labor Statistics.

2. Trump calls meeting with Putin "Exploratory".

3. U.S. Officials: Nvidia and AMD agree to surrender 15% of revenues for export licenses.

4. UBS lowers Brent Crude outlook as supply remains firm.

5. U.S. Media: U.S.-Russia Leaders' Meeting may be held at Alaska's Alyeska Resort.

6. China and the U.S. suspend 24% tariffs again for 90 days.

[News Details]

Trump nominates E.J. Antoni as the next commissioner of the Bureau of Labor Statistics

U.S. President Donald Trump announced on the social media platform Truth Social on Monday that he has nominated economist Dr. E.J. Antoni to serve as the next Commissioner of the Bureau of Labor Statistics (BLS). Trump stated, "Our economy is booming, and Dr. Antoni will ensure that the data released is truthful and accurate. I have no doubt he will do an outstanding job in this new role. Congratulations, Antoni!" Earlier, The Wall Street Journal reported that as chief economist at the Heritage Foundation, E.J. Antoni has long questioned the methodology used by the BLS to compile employment data. The White House’s consideration of appointing a prominent critic like Antoni signals that Trump plans to push for significant reforms at the agency.

Trump calls meeting with Putin "Exploratory"

U.S. President Donald Trump discussed his upcoming meeting with Russian President Vladimir Putin at a White House press conference on August 11th, describing it as an "exploratory" meeting. He expressed confidence that the two sides would engage in constructive dialogue and stated he would tell Putin to end the war. Trump noted that he would speak by phone with Ukrainian President Volodymyr Zelenskyy, adding that his next meeting would either be with Zelenskyy alone or with both Putin and Zelenskyy simultaneously. He also said he would follow up with European leaders after the talks.

U.S. Officials: Nvidia and AMD agree to surrender 15% of revenues for export licenses

On August 11th, the Financial Times reported that U.S. chipmakers Nvidia and Advanced Micro Devices (AMD) have struck a special deal with the Trump administration to secure chip export licenses. Under the agreement, both companies will surrender 15% of their chip revenues to the U.S. government in exchange for the permits.

Citing an unnamed U.S. official, the Financial Times detailed that Nvidia will hand over 15% of sales from its H20 chips, while AMD has agreed to surrender the same proportion from its MI308 chips. People familiar with the matter, including a U.S. official, told the newspaper that the financial arrangement was made to obtain export licenses for sales to China. They added that the Trump administration has not yet decided how to use the funds.

It was also reported that the U.S. Department of Commerce began issuing export licenses for the Chinese market to the companies. In response, Nvidia stated, "We comply with the rules set by the US government for our participation in global markets." It will continue to operate within these rules to serve as many customers as possible. AMD has not yet commented.

UBS lowers Brent Crude outlook as supply remains firm

UBS has turned cautious on the crude oil market, stating that current prices should be at the upper end of the 60−70 range but will gradually decline later this year. The bank now expects Brent crude prices to fall to 62 by the end of 2025 and March 2026, before rising back to 65 by mid-2026. It has also narrowed WTI's discount to Brent from $4 to $3.

Increased production in Brazil and Guyana, steady crude supply from Iran, Venezuela, and Russia, and weaker-than-expected demand in India are the reasons behind this forecast. While UBS remains cautious in the short term, it expects stabilization by mid-2026, with OPEC+ guidance and demand data set to be the next catalysts.

U.S. Media: U.S.-Russia Leaders' Meeting may be held at Alaska's Alyeska Resort

According to a report by the Alaska Landmine on August 11th, U.S. President Donald Trump and Russian President Vladimir Putin may meet at the Alyeska Resort in the Alaskan resort town of Girdwood. The website posted on social media: "Got a tip that the Trump/Putin meeting could possibly be held at the Alyeska Resort in Girdwood. Interesting that Aug. 12-16 is totally blacked out on their booking calendar." Russia's state-run RIA Novosti news agency reposted the Alaska Landmine report, but neither U.S. nor Russian authorities have officially confirmed this information.

China and the U.S. suspend 24% tariffs again for 90 days

U.S. President Donald Trump signed an executive order on August 11th, aiming to extend the suspension of certain tariffs on Chinese goods for another 90 days. Under an agreement reached during the U.S.-China ministerial talks in Switzerland in May, both sides reduced their additional tariffs on each other's goods by 115%. Among these, the 24% portion equivalent to the "additional tax rate" on reciprocal tariffs was suspended for 90 days until 00:01 on August 12th, with negotiations set to continue. China similarly suspended its 24% additional tariffs on U.S. goods for 90 days.

Due to Trump's executive order extending the tariff suspension, the additional tariffs the U.S. imposes on Chinese imports will remain at a total of 30%, comprising a 10% base rate on reciprocal tariffs and a 20% tariff on fentanyl.

[Today's Focus]

UTC+8 12:30 RBA August Interest Rate Decision

UTC+8 13:30 RBA Governor Bullock Holds Monetary Policy Press Conference

UTC+8 14:00 UK June ILO Unemployment Rate

UTC+8 17:00 Eurozone August ZEW Economic Sentiment Index

UTC+8 20:30 US July CPI

UTC+8 22:00 Richmond Fed President Barkin Speaks

UTC+8 00:00 EIA Releases Monthly Short-Term Energy Outlook Report

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Gerik

Economic

Commodity

Tariff Truce Supports Oil Demand Outlook

Brent crude gained 0.39% to $66.89 a barrel and West Texas Intermediate rose 0.34% to $64.18 after Washington and Beijing agreed to extend their tariff truce by 90 days. The move avoids triple-digit duties on Chinese goods and comes as US retailers prepare for the holiday season. Analysts noted that by reducing the immediate risk of an economic slowdown in the world’s two largest oil-consuming nations, the extension has supported expectations for stable fuel demand.

The truce follows months of tariff escalation that had threatened to curtail global trade flows and pressure energy consumption. Market participants now see the pause as a potential bridge toward a broader agreement that could avert what many feared would become a near-trade embargo between the two economies.

Geopolitical Supply Risks Ease Ahead of US-Russia Talks

Attention is also turning to the August 15 meeting in Alaska between President Donald Trump and Russian President Vladimir Putin, aimed at securing a Ukraine peace agreement. The US has threatened secondary sanctions on buyers of Russian oil, including China and India, if no deal is reached. However, the likelihood of such sanctions has diminished ahead of the summit, easing fears of sudden disruptions to Russian crude flows.

ANZ senior commodity strategist Daniel Hynes noted that a peace agreement would remove a key supply risk that has hung over oil markets for months. Washington has also been pressuring Beijing to scale back Russian oil purchases, with Trump hinting at possible tariffs if compliance is not forthcoming.

Beyond geopolitics, traders are eyeing US inflation data due later in the day for clues on the Federal Reserve’s rate path. Signs of cooling inflation could bolster expectations for interest rate cuts, potentially supporting oil prices by improving the economic growth outlook. Conversely, a hotter reading could dampen sentiment by reinforcing concerns about demand resilience.