Fed's Interest Rate Decision: Will Incoming July Inflation Data Tip The Scale?
Portfolio Pulse from Piero Cingari
The upcoming July CPI inflation report is crucial for shaping investor expectations ahead of the Federal Reserve's September meeting. Depending on the data, markets may anticipate either a modest or substantial interest rate cut. The report will influence various assets, including stocks, bonds, and gold.

August 12, 2024 | 7:51 pm
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NEGATIVE IMPACT
The Invesco QQQ Trust (QQQ) tumbled 2.2% after the June inflation report. The July CPI data will be crucial in determining its short-term direction, especially if it influences Fed rate cut expectations.
The QQQ is highly sensitive to inflation data due to its tech-heavy composition. Higher inflation could lead to further declines as investors adjust their rate cut expectations.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) fell 0.9% following the June inflation report. The upcoming July CPI data could further influence its performance based on market expectations for Fed rate cuts.
The SPY is sensitive to inflation data as it impacts investor sentiment and expectations for Fed rate cuts. A higher-than-expected CPI could lead to further declines.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The Invesco DB USD Index Bullish Fund ETF (UUP) fell 0.5% following the June inflation report. The July CPI data could further impact its performance, especially if it influences expectations for Fed rate cuts.
The UUP is sensitive to inflation data as it impacts the dollar's strength. A higher-than-expected CPI could lead to further declines.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 60
POSITIVE IMPACT
The SPDR Gold Trust (GLD) soared 1.8% after the June inflation report. The July CPI data will be crucial in determining its short-term direction, especially if it influences Fed rate cut expectations.
The GLD benefits from lower inflation expectations as it leads to lower interest rates and a weaker dollar. A higher-than-expected CPI could dampen this rally.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70
POSITIVE IMPACT
The iShares 20+ Year Treasury Bond ETF (TLT) rallied 1% following the June inflation report. The July CPI data could further impact its performance, especially if it influences expectations for Fed rate cuts.
The TLT benefits from lower inflation expectations as it leads to lower interest rates. A higher-than-expected CPI could dampen this rally.
CONFIDENCE 85
IMPORTANCE 60
RELEVANCE 70