Core Viewpoint - The article discusses the stability of the U.S. inflation rate in July, with a notable rebound in core inflation, indicating potential implications for monetary policy and market expectations regarding interest rate adjustments [1][6][22]. Inflation Data Summary - In July, the Consumer Price Index (CPI) increased by 2.7% year-on-year, consistent with the previous value and slightly below market expectations of 2.8%. The core CPI rose by 3.1%, surpassing the previous value of 2.9% and the expected 3.0% [1][6][9]. - The core goods prices increased by 1.2% year-on-year, up from 0.7% in the previous month, marking the fourth consecutive month of recovery. Various core goods categories, such as furniture (+0.7% month-on-month) and shoes (+1.4% month-on-month), showed price increases, reflecting the impact of tariffs [2][13][14]. - Core services saw a year-on-year increase of 3.6%, remaining stable compared to the previous month, with a month-on-month rise of 0.4%, higher than the previous 0.3% [4][18]. Tariff Impact and Economic Outlook - The article highlights that the impact of tariffs on inflation may have become more evident in July, although the overall inflation rebound has been moderate due to product differentiation. Future impacts remain uncertain, with varying estimates on how quickly tariffs affect consumer prices [3][14][15]. - The Federal Reserve's internal divisions on monetary policy direction are noted, with some members advocating for a cautious approach while others support a shift towards a neutral interest rate stance, indicating differing views on inflation risks and economic slowdown [5][20][21]. Market Reactions - Following the inflation data, market expectations for a rate cut by the Federal Reserve in September increased, with the probability rising to 93.4% from 85.9%. This led to a decline in the U.S. dollar index and a rise in major stock indices, reflecting a favorable environment for emerging market assets [5][22].

Group 1 - The core viewpoint indicates that the tariff transmission effect has begun to manifest, with June's CPI data revealing structural changes despite appearing weak on the surface [1][2][4] - June's core CPI increased by 0.23% month-on-month, slightly below market expectations, while the year-on-year rate rose from 2.8% to 2.9%, indicating a mild inflationary trend [2][4] - Core commodity prices saw a notable increase of 0.2% in June, marking the first significant rise since February, with household goods and clothing prices experiencing substantial hikes due to tariffs [2][4] Group 2 - The report highlights that household goods prices rose by 0.98%, the largest increase since January 2022, while clothing and entertainment goods also saw price increases [4] - Barclays estimates that the effective tariff rate in the U.S. is between 14-15%, significantly higher than last year's 2.5%, with about 50% of tariff costs expected to be passed on to consumers [4] - The anticipated core PCE is projected to rise by 0.34% month-on-month, driven by a rebound in the stock market and increased investment-related services, reinforcing the Federal Reserve's current policy stance [7]