The US dollar is fading ahead of the CPI report and stock futures are stronger. The fake leak yesterday likely caused a crescendo if selling from the weak hands.
Inflation is expected at 8.8% y/y, up from 8.6% in July.
With gasoline prices falling at one of the steepest paces on record and ample evidence of retailers discounting, there's a good argument we're at peak inflation. We're already halfway through July so June data is stagnant and the market is forward looking.
Perhaps a hot reading gives the market reason to dabble with the idea of a 100 bps Fed hike but I suspect they'll just that down fairly quickly, given that the bond market is waving the victory flag over inflation.
What worries me a little bit is that there's plenty of talk of buying any dip in risk assets -- even on a hot print -- so it's not exactly an unknown trade. Still, it's compelling.
Beyond that, the details of the report and how they translate to inflation in July and the months ahead will be critical.
