Inflation is Dead For Now, But Geopolitical Risk Could Bring it Back
The latest CPI report shows inflation easing, with the annual rate at 2.9%, marking the fourth consecutive lighter-than-expected inflation report. This trend, coupled with a soft labor market, increases the likelihood of a Federal Reserve rate cut in September, with futures implying a 100% chance of a cut. As inflation risks fade, market focus shifts to economic health indicators and potential geopolitical risks, particularly in the Middle East. However, the overall market sentiment remains positive, with the likelihood of lower volatility and a continued climb despite potential global tensions.