Core Viewpoint - Morgan Stanley warns that contrary to market expectations of a September rate cut by the Federal Reserve, persistent service sector inflation may lead to a more hawkish stance from Chairman Powell at the upcoming Jackson Hole meeting [1][2][3]. Group 1: Market Sentiment and Predictions - Market traders have locked in a 93% probability of a 25 basis point rate cut in September, driven by a weak July employment report and downward revisions of historical data [5][6]. - The prevailing narrative suggests that as long as inflation data does not show a catastrophic spike, a preventive rate cut is likely, leading to a "one-way street" towards a September cut [6][4]. Group 2: Service Sector Inflation Concerns - Morgan Stanley identifies service sector inflation as the real issue, overshadowing external factors like tariffs, with core CPI rising from 2.9% to 3.1% year-on-year in July [7][8]. - Service prices, excluding energy, increased by 0.4% month-on-month, while goods prices rose only 0.2%, indicating a more persistent inflationary trend driven by domestic factors [8]. Group 3: Federal Reserve's Dilemma - Powell faces the challenge of managing market expectations without being cornered into a rate cut, as failing to cut rates could lead to significant market turmoil [9][10]. - The Fed's goal is to retain flexibility, especially before the complete release of employment and inflation data, to avoid being forced into a decision by market pricing [9][10]. Group 4: Implications for Future Policy - The upcoming Jackson Hole meeting is expected to be a critical moment for Powell to signal that inflation concerns are more pressing than employment issues, aiming to break the market's certainty about a rate cut [12]. - Investors should prepare for potential market corrections due to discrepancies in expectations, as Powell's message may emphasize patience until more data is available [12].

Group 1 - Morgan Stanley warns that the anticipated interest rate cut by the Federal Reserve in September may not occur, suggesting a "hawkish" stance instead [1][3] - Market consensus indicates a 93% probability of a 25 basis point rate cut, driven by a weak July employment report and significant downward revisions in historical data [1][2] - The report highlights that core inflation is being driven by service sector inflation rather than goods, with July's core CPI year-on-year growth accelerating from 2.9% to 3.1% [2] Group 2 - Service sector inflation is more persistent and challenging than goods inflation, primarily influenced by domestic labor costs and rents, making it harder to reverse once an upward trend is established [2] - Federal Reserve Chairman Jerome Powell faces the challenge of managing market expectations while addressing inflation concerns, indicating that inflation issues are more pressing than employment issues [3] - Powell's upcoming speech is expected to signal that it is premature to assess the final impact of tariffs, and his main task will be to counter the market's assumption of an inevitable rate cut [3]

Core Insights - The recent unemployment claims data presents a complex signal regarding the labor market's adjustment under policy pressures, with initial claims decreasing to 224,000, below market expectations of 228,000, indicating a continuation of low volatility trends [1] - Despite a cooling hiring sentiment due to economic uncertainties from tariff policies, employers have not initiated large-scale layoffs, as evidenced by the average monthly job additions of only 35,000 over the past three months [1] - The continuing high level of continuing claims at 1.95 million suggests that some unemployed individuals are facing prolonged job search periods, aligning with predictions of a slight increase in the unemployment rate from 4.2% to 4.3% [1] Policy and Market Reactions - Recent data has prompted policy changes, including the dismissal of the U.S. Bureau of Labor Statistics director following significant downward revisions of employment data for May and June, with a controversial nominee, EJ. Anthony, proposed for the position [1] - Financial markets are anticipating a rate cut by the Federal Reserve in September, although rising service sector inflation and tariff-induced price pressures may influence the pace of policy adjustments [1] Regional Employment Trends - The four-week moving average of initial claims remains stable at 221,800, while actual claims in regions like Massachusetts have shown an uptick, indicating a divergence in regional labor markets [2]

Core Insights - The latest Consumer Price Index (CPI) report indicates poor inflation data in the services sector, as highlighted by Federal Reserve's Goolsbee [1] Group 1 - The services sector is experiencing unfavorable inflation trends, which could impact overall economic stability [1]

Core Viewpoint - The chief economist of ING, Carsten Brzeski, maintains the expectation that the European Central Bank (ECB) will lower interest rates in September after a pause in today's meeting [1] Group 1 - Core inflation and service sector inflation remain above 2%, providing the ECB with little reason to move away from its current "comfort zone" [1] - If two more weak inflation data points emerge over the summer, along with hard data consistently underperforming soft data, a final rate cut may be seen in the September meeting [1]

金十数据7月24日讯，凯投宏观的Jack Allen-Reynolds写道，欧洲央行将从通胀放缓的进一步迹象中得到 鼓舞。商业调查显示，本月欧元区经济普遍停滞，同时有迹象显示，关键服务业的投入价格正在放缓。 他在报告中告诉投资者："这将加强政策制定者的信念，即服务业通胀（目前仍高于3%）将继续呈下降 趋势。"欧洲央行将于周四晚些时候宣布最新的政策决定，市场普遍预计将维持利率不变。 凯投宏观：服务业数据支持欧洲央行暂停降息 ...

Core Viewpoint - The Vice President of the European Central Bank, Luis de Guindos, noted a significant slowdown in inflation within the services sector [1] Group 1 - The services sector is experiencing a notable decrease in inflation rates, indicating a potential easing of price pressures [1]

Core Viewpoint - The Chief Economist of the European Central Bank, Philip Lane, indicated that there is still a significant distance to overcome regarding inflation in the services sector [1] Group 1 - The services sector inflation remains a concern for the European Central Bank, suggesting that it is not yet at a satisfactory level [1]

Group 1 - The Deputy Governor of the Bank of England, Jon Cunliffe, indicated that inflation in the services sector is showing signs of being quite persistent [1]

Group 1 - The Bank of England is expected to maintain the policy interest rate at 4.25% during the upcoming meeting, with market expectations for two rate cuts within the year [2][3] - Recent disappointing employment data and slowing wage growth are paving the way for potential rate cuts in August and November [3][4] - Wage growth in the private sector has decreased from 6% to nearly 5%, indicating a real cooling of wage pressures [5] Group 2 - The overall inflation situation in the UK remains challenging, with CPI expected to stay above 3% for the year [5] - Service sector inflation rose to 5.4% in April, primarily due to road tax increases and the timing of Easter, but is expected to decrease in the coming months [5][6] - ING predicts that the Bank of England will cut rates again in November, with a final rate of 3.25% by 2026, slightly below market pricing [10] Group 3 - Voting on rate decisions may show some division, with a possibility of a few officials supporting a rate cut this month [6][7] - The meeting is anticipated to result in a vote of 7 to 2 in favor of maintaining the current rate, with potential for a 6 to 3 outcome [7] - The Bank of England has consistently emphasized a "gradual and cautious" approach to monetary policy, which is expected to be reiterated in the upcoming statement [8]