US CPI s.a (Jul) 332.81 (Prev. 332.57)

This is the index level rather than the rate of change that drives the rates market; the tradable signal is the implied month-on-month and year-on-year moves derived from it, and the small tick up in the seasonally adjusted level points to a modest sequential rise. Releases of this kind transmit through the front end of the Treasury curve and fed funds futures, where the policy path is repriced print by print, and through breakevens when the surprise is on the inflation side rather than the growth side. The customary sequence is a knee-jerk move on the headline, followed by a reassessment as the core measure and the composition, shelter, core services, goods, get parsed, since the Federal Reserve has historically weighted the core and services detail more heavily than the all-items figure. The follow-ons worth noting are the producer price data and the PCE deflator that CPI feeds into, which is the measure the committee formally targets. As a level print without the derived rates in the headline, the directional read on its own is limited; the significance sits in the composition and the comparison with consensus on the rates.