Goldman Sachs(US:GS) Hua Er Jie Jian Wen·2025-08-12 07:52Core Insights - The U.S. Consumer Price Index (CPI) for July is expected to show a slight increase in inflation, with a month-over-month rise of 0.2% and a year-over-year increase from 2.7% to 2.8% [1] - Core CPI, excluding food and energy, is anticipated to rise by 0.3% month-over-month and 3.0% year-over-year, marking the highest level since February [1] Inflation Expectations - Various financial institutions have provided forecasts for July CPI, with a median expectation of 0.24% month-over-month and 2.8% year-over-year for overall CPI, and 0.31% month-over-month and 3.1% year-over-year for core CPI [2] - The impact of tariffs on consumer prices is a key focus, with Wells Fargo noting that the data will help assess the extent to which tariff increases have affected consumer wallets [4] Federal Reserve Outlook - The market anticipates a high probability (89%) of a 25 basis point rate cut in September, driven by weak job growth and inflation data that is not expected to be excessively hot [7] - Goldman Sachs suggests that as long as core CPI does not exceed 0.44% month-over-month, the market will view tariffs as a short-term influence, limiting their impact on rate cut expectations [6] Market Reactions - The stock market is expected to react significantly to the CPI data, with potential volatility reaching 0.70%, the highest since May [11] - If core CPI exceeds 0.40%, the S&P 500 could decline by more than 2% to 2.75%, while lower inflation readings could lead to gains [13] Data Quality Concerns - There are concerns regarding the quality of CPI data collection, as the U.S. Bureau of Labor Statistics has reduced its data collection efforts, leading to increased volatility in monthly data [9]