CPI & China Inflation Data Awaited

The impending release of the US Consumer Price Index (CPI) and China’s inflation data this week has set the stage for a market watch. The recent rally in crude oil prices has prompted new inflation worries for the Federal Reserve just as US job growth slows down. The Fed, steadfast in its quest for a 2% US inflation rate, faces a crucial decision in its upcoming September meeting.

US CPI and PPI Figures Awaited

Thursday’s unveiling of the July Consumer Price Index (CPI) will provide insights into whether the Federal Reserve’s aggressive interest rate hikes are tapering. Expected to show a slightly more aggressive expansion in July, compared to June, the CPI could influence the Fed’s decision. Preceding the CPI release, the Producer Price Index (PPI) for July is expected to see core producer prices rise year-on-year. The Fed’s goal to restore inflation to pre-pandemic levels spurs its ongoing monetary tightening.

Lower CPI Could Delay Rate Hikes

A lower CPI reading could influence the Fed’s rate hike decision for September, following a quarter-percentage-point hike in the previous month. With runaway jobs growth and higher wages driving inflation, the Fed’s next rate decision holds significant weight. Market interest rates reflect economic conditions, with yields indicating adjustments. The rally in oil, having gained nearly 20% in the past month and a half, adds to inflationary concerns.

China’s Trade and Inflation Data

China’s trade figures today and forthcoming July inflation number on Wednesday data could reveal challenges in the world’s second-largest economy. China’s economic recovery has faced headwinds despite policy support. The nation’s appetite for oil-derived products may have peaked due to economic hurdles, impacting global oil demand.

China’s Post-Covid Recovery Falters Amidst Weakening Demand

The trajectory of China’s recovery from the Covid-19 pandemic has hit a stumbling block in recent months, as both domestic and international demand weaken. Despite the strides made in the initial stages of the recovery, the road ahead has proven to be challenging. Acknowledging the urgency of the situation, Chinese authorities have introduced a sequence of policy interventions in the past weeks to bolster the waning recovery. Although specifics have been limited, the investment community is hoping for further measures, especially after today’s disappointing trade figures were unveiled.

Oil Rally and Fed’s Concerns

The oil rally, spurred by Saudi Arabia and Russia’s production cut commitments and ongoing Ukraine-Russia war, raises fresh concerns for the Fed. Crude prices surged, with WTI hovering around $82.61 per barrel and Brent at $86.05 per barrel. However, a potential consolidation around $85 a barrel (Brent) is expected due to China’s economic concerns and doubts about ongoing production cuts by major oil producers.  As market dynamics shift, vigilance remains paramount as investors navigate through the intertwined landscape of oil prices and inflation data.

For more insights and analysis, visit

Latest News