📊 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 ~⅓ 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 → cut pressure prevails.
Trade/tariff effects remain a watchpoint, though PPI was subdued at –0.1% MoM.
💱 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).
👉 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.
