U.S. July CPI Data Set for Strong Release,U.S. Tariffs on Semiconductors and Pharmaceuticals May Be Imminent【The week ahead】

TradingKey - Last week, all three major U.S. equity indexes posted gains, with the Dow Jones Industrial Average rising 1.35%, the S&P 500 advancing 2.43%, and the Nasdaq Composite surging 3.87%, while the Nasdaq-100 climbed 3.73%. The rally was largely driven by strong performance from heavyweight Apple.This Tuesday, the U.S. will release its July Consumer Price Index (CPI) data, which could provide fresh signals on the Federal Reserve’s monetary policy path. Meanwhile, a new wave of earnings season begins for Chinese tech and internet stocks. Market heavyweights including Tencent Holdings (00700.HK), JD.com (JD.US), JD.com-SW (09618.HK), and Xiaomi Group-W (01810.HK) are set to report their latest quarterly results in the coming days.On the U.S. earnings front, companies such as Oklo, Circle, Coherent, and Archer Aviation will also be in focus.

Preview of major events

U.S. July CPI Data Set to Fuel Financial Market Volatility

This week, the U.S. is set to release its July Consumer Price Index (CPI) data, with investors eager for fresh signals on monetary policy. Last month’s report showed a broadly tame inflation picture, with core CPI rising 2.9% year-over-year. Markets now widely expect a rate cut by the Federal Reserve in September, with the key question shifting to whether the move will be 25 or 50 basis points.

Citi economists noted that after the June report revealed "early signs of sharp increases in goods prices," investors will be closely watching how much of the recent tariff impact has been passed through to consumer prices. They anticipate a modest broadening of this pass-through in July, likely contributing to stronger core goods inflation. However, the full effect may become more pronounced in the fall—and should not deter the Fed from cutting rates next month, especially given the ongoing softness in the labor market.

U.S. July Retail Sales May Extend Decline

U.S. July retail sales data will be released at 8:30 p.m. Beijing time on Friday, offering investors the latest insight into consumer spending trends. Economists expect retail sales to rise 0.5% month-over-month, slightly below June’s 0.6% gain.

Michael Reid, Senior U.S. Economist at RBC, said he expects a significant portion of the increase to come from auto sales. He forecasts that control group sales—retail sales excluding volatile categories like automobiles, which are used in GDP calculations—will rise just 0.1%. “We expect the ex-autos components to be fairly lackluster,” he said.

Multiple Fed Officials Speak Out in Rapid Succession, Revealing Clear Divide Between Two Camps

Following the release of the employment report, the Federal Reserve ended its blackout period, prompting a flurry of commentary from policymakers. On August 13, Thomas Barkin, the 2027 FOMC voter and President of the Richmond Fed, delivered a speech. On August 14, Raphael Bostic, also a 2027 FOMC voter and President of the Atlanta Fed, spoke on the outlook for the U.S. economy. Later that same day, Austan Goolsbee, a 2025 FOMC voter and President of the Chicago Fed, addressed monetary policy.

According to a research note from Bank of America, a clear divide has emerged within the Fed, forming two distinct camps. The dovish group, represented by New York Fed President John Williams and Richmond Fed President A. Kathryn Hammack, believes the labor market remains resilient and continues to prioritize concerns over inflation.

Selected Economic Data

Tuesday: U.S. July Unadjusted CPI Year-over-Year

Tuesday: Reserve Bank of Australia Announces Interest Rate Decision

Thursday: U.S. July Producer Price Index (PPI) Month-over-Month

Friday: U.S. July Retail Sales Month-over-Month

This week's featured events

Tuesday: Thomas Barkin, 2027 FOMC voter and Richmond Fed President, delivers speech

Thursday: Bank of Canada releases monetary policy meeting minutes

Friday: U.S. President Donald Trump meets with Russian President Vladimir Putin in Alaska

Company Financial Report

U.S. Stocks

Tuesday: Tencent Music (TME.N)

Thursday: Weibo (WB.O)

Hong Kong Stocks

Tuesday: China Unicom (00762.HK)

Wednesday: Tencent Holdings (00700.HK)

Thursday: JD.com (09618.HK), NetEase (09999.HK)