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#CPIToResetFedBets The upcoming July U.S. CPI report could become the next major turning point for Federal Reserve expectations. June headline inflation stood at 3.5% year-on-year, while core inflation was 2.6%. Markets now expect both readings to ease slightly when the July data is released on August 12. This follows a surprisingly weak employment report and substantial downward revisions to previous payroll figures, which reduced confidence in the labor market and lowered expectations for another rate increase in September. However, one softer CPI report may not be enough to settle the debate. Energy prices and geopolitical disruptions could keep headline inflation elevated, while persistent services inflation would make the Fed cautious about declaring victory. A downside surprise could support equities, bonds and crypto by strengthening the case for a prolonged rate pause. An upside surprise would revive tightening concerns and potentially pressure risk assets. The most important detail may therefore be the composition of inflation—particularly housing and services—rather than the headline number alone.