Pantheon Macroeconomics forecasts the CPI data aligns with a 0.23% rise in the core PCE set for later release. Upcoming PPI data is expected to support this view. Despite the recent CPI, market expectations regarding Federal Reserve easing remain largely unchanged, with continuing sentiment for a rate cut.<\/p>\n
The Wall Street Journal suggests the CPI reading could have affected a September rate cut, but July’s data was not substantial enough to impede it. Discussion has arisen regarding the reliability of economic data, especially following substantial revisions in US employment figures. Concerns about data accuracy are mounting.<\/p>\n
Fed chair Powell once regarded US economic data as the gold standard, but recent events have cast doubt. In light of this, President Trump has nominated E.J. Antoni, a critic of the Bureau of Labor Statistics, to lead the agency. This follows the firing of Commissioner Erika McEntarfer, after revised data revealed that previous job growth figures were overestimated by 258,000 for May and June, a revision that drew across-the-board criticism. Trump’s nomination is seen as an effort to place allies in key positions affecting economic data.<\/p>\n
The July CPI report keeps the door open for the Federal Reserve to cut rates. We see the CME FedWatch tool now pricing in a roughly 75% chance of a 25-basis-point cut at the September meeting. This sentiment holds despite inflation remaining stubbornly above the Fed’s 2% target.<\/p>\n
The bigger story for us is the growing crisis of confidence in the economic data itself. Following the massive 258,000 downward revision to the May and June 2025 job numbers, simply trading the headline figures has become a fool’s errand. This revision was one of the largest in recent memory, shaking the market’s trust in initial reports.<\/p>\n
This uncertainty is now amplified by politics, with the nomination of a known critic to head the Bureau of Labor Statistics. We must now price in a political risk premium to every major data release, from jobs to inflation. The market will likely scrutinize methodology and anticipate revisions more aggressively than ever before.<\/p>\n
We’ve seen periods of data skepticism in the past, such as the large annual benchmark revisions to payroll data in early 2023. Back then, the market reacted with sharp, short-term volatility as it repriced economic expectations. We anticipate a similar, but more sustained, pattern of uncertainty in the coming months.<\/p>\n
This environment suggests that owning volatility is a prudent strategy. We should be looking at buying options that benefit from large price swings, regardless of direction, especially around key data releases like the upcoming PPI report and the September FOMC meeting. Implied volatility on interest rate-sensitive ETFs like TLT is likely to become elevated.<\/p>\n
Instead of making simple directional bets on rates falling, traders should consider strategies like straddles or strangles. These positions can profit from a significant market reaction to economic numbers, whether they come in surprisingly hot or cold. Hedging existing portfolios with puts on major indices also becomes more critical.<\/p>\n
All eyes will now be on tomorrow’s Producer Price Index (PPI) and the core PCE data later this month. These releases will be the first major tests of the market’s faith in official statistics under this new, politically charged environment. We expect any deviation from consensus to be met with an outsized market reaction.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Pantheon forecasts support a core PCE rise; data reliability questioned after major employment revisions and leadership changes.<\/p>\n","protected":false},"author":62,"featured_media":17022,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28859","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28859","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=28859"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/28859\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17022"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=28859"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=28859"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=28859"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}