What to Watch: Eagerly Awaited Inflation Metric July CPI

Still up for the week, Tsys have scaled back modest overnight gains, yield curves little steeper. Light volumes (TYU2<255k) ahead this morning's key CPI data at 0830ET (prior, est):

• CPI MoM (1.3%, 0.2%,); YoY (9.1%, 8.7%)
• CPI Ex Food and Energy MoM (0.7%, 0.5%); YoY (5.9%, 6.1%
• CPI Index NSA (296.311, 296.723)
• CPI Core Index SA (294.354, 295.835)
• Real Avg Hourly Earnings YoY (-3.4% rev, --), Wkly YoY (-4.0% rev, --)
• Additional data: Wholesale Inv MoM (1.9%, 1.9%) at 1000ET, Monthly Budget Statement (-$88.8B, -$170.0B) at 1400ET.
• Expect to see Tsys sell-off, markets price in another 75bp hike in mid-Sep in the event of another hot read for the inflation metric:
  • The Fed will be prepared to hold interest rates "higher for longer" should inflation continue to surprise to the upside, and market pricing will need to adjust accordingly, Federal Reserve Bank of St. Louis President James Bullard told MNI Tuesday, MNI FedSpeak podcast. "If we do get inflation slowing down, then we may be able to hold the rate at that higher rate for that period of time."
• Scheduled Fed speakers
  
  • Chicago Fed Evans, mon-poli/eco-outlook, Drake Univ, 1100ET
  • MN Fed Kashkari on inflation, Aspen Eco Strategy Grp, 1400ET
• Treasury auctions: $30B 119-day bill CMB auction at 1130ET, $35B 10Y note auction (91282CFF3) at 1300ET.