COOL CPI REPORT = TIME FOR RATE CUT?

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Markets are coming off a strong bounce as traders digest fresh inflation data and shift their focus to what’s next. CPI came in cooler than expected, reigniting the rate cut debate… and while earnings season is winding down, $NVDA ( ▼ 0.86% ) report later this month could still be the shot that keeps the market’s rally alive into the fall.

COOLER CPI, HOTTER RATE CUT ODDS

The July CPI report gave markets exactly what they wanted—a hint that inflation is cooling without signs of a sharp economic slowdown. Headline inflation rose 0.2% MoM, pulling the YoY reading down to 2.7% from June’s 2.7%, narrowly beating expectations. Core CPI, which strips out food and energy, rose 0.3% MoM and 3.1% YoY, slightly above forecasts but still within a range that leaves the Fed breathing room.

Key takeaways:

• Headline YoY: 2.7% (vs. 2.8% expected)

• Core YoY: 3.1% (vs. 3.0% expected)

• Shelter costs slowed, while used car prices and airfare dropped notably

• Energy was a mixed bag… gasoline prices rose, but electricity and natural gas were flat to down

The market’s reaction was quick… Fed Funds futures now price a 90%–94% probability of a September rate cut. The tone from Fed officials has already softened in recent weeks, and with labor data showing cracks, the CPI miss strengthens the case for the Fed to move sooner rather than later.

NVIDIA STILL THE MAIN EVENT… AUGUST 27

Most of the big names have already reported, but one heavyweight remains: $NVDA ( ▼ 0.86% )  reports Q2 results on Wednesday, August 27, after the bell. Expectations are sky-high given the company’s track record of beating and raising guidance during this AI cycle.

Investors will be looking for:

• Data center revenue growth and any signs of slowing GPU demand

• Progress on GB200 shipments and customer adoption

• Updates on AI software and inference monetization

• Gross margin commentary, given the scale-up in higher-priced products

The stock has been consolidating for weeks, and options markets are pricing in a high single-digit move post-earnings. With sentiment still heavily bullish on AI infrastructure, a strong beat could pull the broader tech sector higher into Q4. A miss, however, could weigh on risk assets given how much $NVDA ( ▼ 0.86% ) now anchors AI sentiment.

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