Inflation Data Keeps Fed Rate Hike in Play

• July CPI and PPI reports are critical, with inflation expected to remain above the Fed's 2% target.
• The recent jobs report, showing negative payrolls but a ticking down unemployment rate, reinforces the Fed's hawkish stance.
• Neil Dutta predicts a high probability of at least one more Fed rate hike by year-end, possibly in September, due to persistent inflation and tightening labor market conditions.
• He notes increasing hawkish sentiment among Fed governors, suggesting the Fed Chair may have no choice but to align with a hike.

The discussion centers on the upcoming July CPI and PPI reports and their implications for Federal Reserve policy. Neil Dutta argues that despite negative payrolls, the recent jobs report indicates a tightening labor market. He believes that persistent inflation and increasing hawkish sentiment among Fed governors make a September rate hike highly probable, contrary to current market expectations for a hold.