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The inflation report is not the end of this week’s argument. It is the start of it. On Wednesday the July CPI lands, and consensus wants 0.1% on the month with the annual rate easing to 3.4%. Then on Thursday morning, less than 24 hours later, Beth Hammack takes a microphone. She is one of three Fed officials who voted to raise rates in July, she votes again in September, and she gets the first word on whatever Wednesday produces. Tom Barkin follows 25 minutes after her. Add a jobs report that went negative last week and a market still pricing roughly a 40% chance of a September rate rise, and Thursday morning becomes the most interesting 30 minutes of the month.
Last Week, Graded
US Jobs Report (July): Missed The economy lost 23,000 jobs against expectations of an 83,000 gain, and revisions cut a further 103,000 from May and June, which turned a soft patch into something closer to a stall.
ISM Manufacturing (July): Beat Factory activity hit 55.6 against 54.0 expected, the strongest reading since May 2022, with factory employment growing for the first time in 33 months.
ISM Services (July): Missed The services index came in at 54.1 against 54.5 expected, and the employment component dropped back into contraction at 47.4 after a 3.8 point fall.
China Inflation (July): Cooler Consumer prices rose 0.5% on the year against 0.8% expected and factory-gate inflation eased to 3.5% from 4.1%, a three-month low.
The setup: markets cut the odds of a September rate rise from roughly 58% to about 40% on Friday and pushed the S&P 500 to a record close, so Wednesday’s inflation number now carries the deciding vote.