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πŸ“Š U.S. August CPI and Weekly Jobless Claims

πŸ“Š U.S. August CPI and Weekly Jobless Claims

CPI (Consumer Price Index)

  • MoM: +0.4% (double the previous month’s pace)

  • YoY: +2.9% (+0.2pp vs prior month, highest since January 2025)

  • Core CPI (ex-food & energy): +0.3% MoM, +3.1% YoY (in line with forecasts)

Key Drivers:

  • Housing +0.4% (accounting for ~β…“ of total increase)

  • Food +0.5%

  • Energy +0.7% (Gasoline +1.9%)

  • Autos: New cars +0.3%, Used cars +1.0%

Labor Market

  • Initial Jobless Claims: 263k (vs forecast 235k, +27k WoW)

  • Signals renewed concerns about labor market weakness.

Monetary Policy Implications

  • Markets now see a 100% probability of a September Fed rate cut.

  • Base case: –25bp cut.

  • But with weaker labor data, a –50bp cut is also being cautiously priced in.

  • Inflation came in on the firm side, but labor weakness dominates β†’ cut pressure prevails.

  • Trade/tariff effects remain a watchpoint, though PPI was subdued at –0.1% MoM.

πŸ’± Market Takeaways

  • FX: In theory, stronger CPI = USD bullish. But job weakness pushes earlier-cut expectations, leaving the dollar with a choppy, mixed reaction short term. Medium term, the path of least resistance remains toward USD weakness on rate cuts.

  • Equities: Rate cut certainty offers support, though slowdown fears raise volatility risk.

  • Bonds: Yields biased lower, demand strong as easing bets firm.

  • Commodities: A softer dollar outlook underpins gold (XAU/USD).

πŸ‘‰ Summary: Inflation came in hotter, but labor market deterioration cancels it out. The Fed faces mounting pressure to cut, with markets leaning toward a weaker dollar trajectory medium term, despite near-term volatility.

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