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Analysts at TD Securities note that the US headline inflation came in line with expectations in July at 0.3% m/m (0.335% unrounded), which lifted the annual measure higher to 1.8% y/y (TD: 1.8%; consensus: 1.7%).

Key Quotes

“Core inflation surprised consensus expectations for a second straight month at 0.3% m/m (0.291% unrounded) and 2.2% y/y “” its highest level in eight months. Strength in the monthly print was broad-based, with both the core services and core goods segments posting firm increases in July. The latter, at 0.2% m/m, continues to reflect the ongoing rebound in some of the items the kept core goods prices depressed in recent months.”

“Despite the firmer July core CPI print, we do not see the reading fundamentally changing the calculus for the Fed. We continue to expect the Fed to deliver cuts at its September and October FOMC meetings, with global growth, manufacturing, and trade remaining key concerns.”