US inflation the main focus in the day ahead

AI summary

<p class="text-align-justify" style="text-align: justify;">There's only one game in town for markets today. And no, it isn't France versus Spain sadly. The trading day ahead will center around the US CPI report for June, with inflation data coming back into focus amid the turn of events in the Middle East this past week.</p><p class="text-align-justify" style="text-align: justify;">The US-Iran conflict is back on and that is continuing to turn heads with oil prices surging higher again. WTI crude is clipping the $80 mark with Brent crude rising back up to touch $85 earlier. And that in turn is prompting markets to rethink the Fed outlook again, just weeks after the ceasefire deal was signed.</p><p class="text-align-justify" style="text-align: justify;">As such, the US inflation data coming up later will take on added importance - even if not quite fully reflective of the latest developments yet.</p><p class="text-align-justify" style="text-align: justify;">Headline annual inflation is expected to ease slightly in June to 3.8%, down from 4.2% previously. That comes as the monthly estimate is also expected to show some deflationary signs, driven by a sharp drop in gasoline prices. Of note, energy prices are estimated to fall over 5% month-on-month after the strong surge during the March to May period.</p><p class="text-align-justify" style="text-align: justify;">However, core prices are expected to keep a little more sticky with core annual inflation estimated at 2.8% - margin