The night before Jackson Hole, the "inflation thunder" will be revealed! July core PCE may rise to 3.3%, and expectations for interest rate hikes in September are heating up

At 20:30 Beijing time tonight, the U.S. Department of Commerce will release the July Personal Consumption Expenditures (PCE) Price Index. The market expects the overall PCE in July to rise by 0.1% month-on-month, with the year-on-year growth rate falling from 3.7% in June to 3.6%; the core PCE month-on-month may rise from 0.1% to 0.2%, while the year-on-year remains at 3.3%, marking the 65th consecutive month above the Federal Reserve's 2% inflation target.It is noteworthy that rising prices in the AI industry chain, high valuations in the stock market driving up portfolio management fees, and the situation in the Middle East leading to increased energy costs may all become potential drivers of core inflation. Goldman Sachs predicts that stock market valuation factors may contribute approximately 0.11 percentage points to the month-on-month increase in core PCE in July.What draws more market attention is that the Bureau of Economic Analysis plans to comprehensively adjust the PCE statistical methods by the end of September, which may lead to adjustments in the price calculations for categories such as computer hardware, stock portfolio management, and legal services, and may also retroactively revise historical data, increasing the difficulty of interpreting inflation data.Currently, the market's divergence regarding the Federal Reserve's policy path in September has intensified. The CME "FedWatch" shows that the probability of the Federal Reserve keeping interest rates unchanged in September is 59.9%, while the probability of a 25 basis point rate hike has risen to 40.1%. The market is also waiting for this week's Jackson Hole annual meeting to seek the latest signals from Fed Chair Powell regarding inflation and subsequent interest rate policies.