The July CPI report released by the U.S. Bureau of Labor Statistics today showed moderate inflation, pushing up expectations of a Federal Reserve rate cut. The U.S. dollar index fell 0.50% to 97.85 during the session. The CPI rose 0.2% month-on-month and 2.7% year-on-year in July, lower than the market expectation of 2.8%; the core CPI rose 0.3% month-on-month and 3.1% year-on-year, slightly higher than the expected 3.0%.



Goldman Sachs analysts said the "mild and in-line with expectations" CPI data provides room for a 25 basis point rate cut at the Federal Reserve's September 16-17 meeting. Market expectations have risen from 88% to 96%, and the probability of another 25 basis point rate cut in October is 62%. Morgan Stanley Chief Economist Ellen Zentner noted that the slight upward trend in core inflation stems from the stickiness of service prices, but overall inflation is manageable, suggesting the Federal Reserve may implement an "insurance rate cut" to counter slowing growth.

Trump's policies have exacerbated market volatility, with the 10-year US Treasury yield rising 3.8 basis points to 4.328%. Trump hinted at possible legal action against Federal Reserve Chairman Powell in a TruthSocial post, raising concerns that his interference with the Fed's independence could increase inflation risks. Regarding tariffs, Trump extended the US-China tariff truce for 90 days but imposed a 100% tariff on semiconductor imports (with exemptions for US production) and increased tariffs on Indian imports from 25% to 50%. Bloomberg Economics projects that the average US tariff will rise from 13.3% to 15.2%.

A Bank of America global fund manager survey showed that 70% of investors expect a "soft landing" for the U.S. economy, but Brent Schutte, chief investment officer of Northwestern Mutual Funds, warned that tariffs could trigger a rebound in inflation and that expectations of interest rate cuts may be too optimistic.

A weakening dollar pushed the euro up 0.32% to 1.1028 against the dollar, but the potential impact of US tariffs on the European economy has kept the market cautious about the euro. USD/JPY rose 0.22% to 147.65, as the threat of tariffs on Japan's economy continues to weigh on the yen. The probability of a 25 basis point interest rate cut by the European Central Bank on September 11 is only 5%.

Blackstone Group's 2025 mid-year outlook report noted that tariffs and geopolitical risks are undermining macroeconomic stability, and recommended increasing holdings of US stocks and gold to hedge against uncertainty. Precious metal prices are under short-term pressure, with December gold futures (GCZ25) falling 29.5 points (0.88%) to $2,429.50 per ounce, and September silver futures (SIU25) falling 0.195 points (0.50%) to $27.10 per ounce. Mild CPI data and Trump's confirmation that he will not impose tariffs on gold imports have eased supply concerns, but expectations of interest rate cuts and geopolitical risks in Ukraine and the Middle East have provided safe-haven support for precious metals.


(Source: Yihuitong)

BNP Paribas predicts silver prices will break through $40 per ounce, with gold supported by central bank purchases. JPMorgan Chase's 2025 mid-year outlook emphasizes that tariffs and geopolitical risks will drive buying in precious metals, recommending an increase in holdings. ETF data shows that gold ETF holdings reached a two-year high on Monday, while silver ETF holdings hit a three-year high last Friday.

Regarding the market outlook, the CPI report provides room for the Federal Reserve to ease policy, but Trump's tariffs and threats of intervention could exacerbate volatility. Schroders analysts expect US economic growth to slow to 1%-2% and recommend increasing gold holdings to hedge against inflation and a weakening dollar. Investors should monitor Friday's Trump-Putin summit (expected to yield limited progress) and the upcoming PCE price index and employment data to gauge the Fed's policy path.