Inflation is rising, but the Fed’s next moves hinge more on the labor market than the latest price prints. Marc Chandler, Managing Partner at Bannockburn Global Forex and editor of the Marc to Market, joins us to discuss:
- Inflation check: CPI roughly in line but trending higher; PPI surprised to the upside. Mark notes this likely points to a firmer core PCE later this month – but the question is persistence, not just direction.
- Fed priorities: Despite hotter inflation data, Powell has linked policy to labor-market balance (unemployment rate over payroll headlines). Markets overshot on cut odds after weak jobs data; expectations have since drifted back toward the Fed’s guidance.
- Cuts & QT: Baseline view is ~50 bps of easing this year, with potential messaging around slowing/ending QT as part of reducing overall restrictiveness.
- Markets vs. data: Equities keep shrugging off noise (tariffs/geopolitics). Retail sales resilience underscores still-solid demand, tempering the case for aggressive cuts.
- U.S. dollar: The downtrend has resumed after a brief short-covering rally. For a big-picture read, watch U.S. rates more than cross-country differentials.
- Near-term catalysts: Expect a quieter macro week – flash PMIs and Jackson Hole (labor focus) ahead; the next jobs report is the true potential game-changer for September policy odds.