Data Delivers Few Surprises

• US inflation matched expectations, giving markets little reason to reprice the Fed. Headline CPI rose 0.1% m/m and 3.4% y/y, while core inflation printed 0.2% m/m and 2.5% y/y. Markets now price less than a 50% chance of a September rate hike.
• The Middle East remained in focus, but oil traded in a narrow range. President Trump said the US has “total control over the Strait of Hormuz”, while negotiations between Iran and Oman continue without a breakthrough.
• RBA Assistant Governor Chris Kent speaks today, with markets expecting him to reinforce Tuesday’s hawkish hold. Any shift in tone on inflation, energy prices or the outlook for further tightening will be closely watched.
• Today’s focus shifts to US producer prices and weekly jobless claims. Following this week’s benign CPI print, the data will provide the next read on inflation pressures and labour market resilience ahead of the September Fed meeting.