Gentle Market Lift Before Inflation Eyeing

 

Tuesday’s global markets opened with a cautious optimism as confirmation arrived: the U.S.–China tariff truce has been extended for another 90 days, easing concerns of a sudden surge in trade tensions. With the deadliest uncertainty averted, investor focus swiftly shifted to pivotal U.S. economic data later today.
All eyes are now on the July Consumer Price Index. Analysts expect headline inflation to hover near 2.8%, while core inflation—stripping out volatile food and energy items—might record a 0.3% monthly jump, the sharpest since January. This would nudge annual core inflation close to 3.0%, raising questions about sustainable economic momentum.
In Asia, markets responded positively: Chinese equities ticked up around 0.5%, reflecting relief that triple-digit tariffs won't be reinstated anytime soon. Meanwhile, U.S. stock futures were mostly steady after a slight dip earlier, suggesting cautious confidence about the day ahead.
Financial markets outside equities were also calm. Treasury yields and the dollar showed little movement, with bond market volatility remaining anchored near multi-year lows—a sign of muted investor anxiety heading into the inflation release.
Down under, the Reserve Bank of Australia delivered on expectations, cutting rates by 25 basis points. In Japan, markets returned from holiday with a bang—Nikkei surged more than 2%, driven by renewed risk appetite and stabilized trade prospects.
Commodities and FX markets gave muted reactions. Gold held its ground following reassurances that it won’t face tariff barriers. British currency gained a bit of strength as recent UK wage and retail numbers tempered bets for further rate cuts by the Bank of England.
Looking ahead, the market calendar is full: the U.S. July CPI at the core, alongside the NFIB small business confidence survey and federal budget data. Top Fed officials are slated to speak, which could give added color to rate expectations, while corporate watchers will be watching earnings from Cardinal Health closely.
In short: investors are treading water—relieved by the temporary truce, but staying alert for data that could reshape monetary policy outcomes.