The US inflation report, CPI, is scheduled for release on Tuesday, July 15, at 8:30 am US Eastern time, which is 12:30 GMT. TD Securities and Bank of America forecast month-over-month core inflation to rise by 0.3%.
This increase would be the highest since January’s 0.4%. TD Securities expects goods prices to rise due to tariff passthrough, while services may not provide relief. Bank of America predicts a 0.3% month-on-month and 3.0% year-on-year increase for core inflation, with a headline rate of 2.7% year-on-year.
Inflationary Pressures
The breadth of inflationary pressures will be pivotal in the report. If inflation is reaccelerating broadly, it could negatively affect the bond market, leading to higher yields for adverse reasons. This situation might suggest fewer Federal Reserve rate cuts than anticipated.
Such developments could also impact equity markets. With proposed hefty tariffs, the situation could further escalate.
That CPI reading delivers more than just an idea of where prices are headed—it shapes expectations around borrowing costs, money flows, and risk behaviour in the coming months. The 0.3% expected increase in core inflation may seem modest at first glance, but given recent patterns, it reflects a bit more momentum than policymakers were likely hoping for. After January’s unexpectedly firm number, a repeat performance removes any sense of randomness.
When TD sees tariff passthrough swelling goods prices again, it reinforces the idea that input costs are being carried forward directly to end consumers. That matters because these pressures aren’t necessarily easing across other sectors either. Services, which had shown some signs of cooling, might now stall that progress. Prices sticking or drifting higher there could undo prior assumptions that disinflation was becoming more reliable.
Bank of America’s 3.0% year-on-year core figure is just inside most comfort zones, but not comfortably so. If general price levels are freshly supported by both goods and services, then traders can expect heightened sensitivity to forthcoming data. That kind of setup invites revisions—not to quarterly guesses, but to trajectory over the next few meetings.
Bond Market Reactions
We’ve seen bond market reactions hinge less on absolute figures and more on the shape or persistence of inflation. If upside strength doesn’t look isolated, if it’s spread across sectors, then translating that into curve movement becomes easier. We’ll likely see long-end yields adjust first, since fear of persistent inflation often begins there. That knocks asset allocation around in places not limited to fixed income.
Also worth keeping in mind is the tariff equation. If policymakers continue to threaten or enact scale-ups, like those already floated, then price effects become less theoretical. Traders should already factor downstream effects, particularly if these are passed quickly through durable goods.
Given those possible responses and the layered impact they carry, expectations for central bank action are under strain. If inflation metrics reveal broad acceleration, especially when paired with tighter supply chains or sticky wage pressures, then easing becomes harder to argue for short-term. That dynamic tightens both optionality and breathing room across markets.
Watch the trend components—not just the number. If the figures show energy stabilising but shelter gaining pace, that’s a different message than energy falling while services rise. Market reactions will be shaped accordingly.
This is shaping up to be a reaction-heavy week. If broad-based strength in price levels confirms what was hinted at earlier this year, asset positioning, particularly where leverage or implied volatilities are high, may need fast adjustments. Concentrate on where pressures are originating and how widely they’re being felt, rather than only headline aggregates.
