Bond Traders’ High Hopes for September Rate Cut Hinge on CPI (1)

Bond investors betting on a Federal Reserve interest rate cut next month face a potential roadblock: inflation.

July’s consumer price index, due on Tuesday, will give traders clues on how President Donald Trump’s tariffs are affecting costs. Economists surveyed by Bloomberg expect the annual core inflation rate to rise to 3%, the highest since February.

“The market is looking for further confirmation that changes to trade policy are passing through into higher goods inflation,” said Gennadiy Goldberg, head of US rates strategy at TD Securities. “All else equal, a higher inflation print could leave the Fed wanting to ...