July CPI Lands In Line, Cementing Market View That Fed Hike Risk Has Faded

The July Consumer Price Index delivered the outcome bulls needed most: nothing new. A 0.1% headline gain and 0.2% core increase matched consensus, keeping the trailing disinflation trend intact and denying hawks fresh ammunition ahead of the September FOMC. Market-implied probabilities of a rate hike, already depressed, compressed again on the release. For allocators, the significance is less about the single print than about the accumulating evidence that goods and shelter components are no longer generating the upside surprises that repeatedly repriced the front end of the curve. That stability is quietly doing heavy lifting beneath equity valuations, particularly for long-duration growth and capital-intensive infrastructure names whose discount rates are most sensitive to terminal-rate assumptions. Risks remain two-sided: an in-line print is not a dovish print, and the Fed retains optionality. But the policy distribution has narrowed, and that narrowing is itself a tailwind for risk assets into the autumn.