Investors Hold Fire Before CPI Report Amid Tariff, Rate Cut Jitters – Europe Market Wrap

Stock futures wavered, reflecting a subdued tone across most asset classes, as investors stayed on the sidelines ahead of Tuesday’s inflation report that could reshape expectations for US interest rate cuts.

S&P 500 and Nasdaq 100 contracts were little changed. Europe’s Stoxx 600 index erased early gains of as much as 0.4%. The dollar and US Treasuries traded flat, with the yield on 10-year notes at 4.28%. Gold ticked higher.

The inflation report arrives after traders in recent weeks ramped up bets for Federal Reserve rate cuts this year, anticipating that officials will act to bolster a labor market showing signs of softening. Still, investors remain attuned to the risk of persistent price pressures – particularly in the face of shifting US tariff policies – and the potential for a stagflationary backdrop.

Money markets show traders have priced in more than two rate cuts by December, with about an 80% probability of a quarter-point reduction next month. The core consumer price index, regarded as a measure of underlying inflation because it strips out volatile food and energy costs, is expected to show a 0.3% increase for July, compared to 0.2% in the previous month.

NVIDIA fluctuated in premarket trading after China urged local firms to avoid the chipmaker’s H20 processors, particularly for government-related purposes. The move will complicate NVIDIA’s attempts to recoup billions in lost China revenue, as well as the Trump administration’s push to turn those sales into a US government windfall.

Some investors and analysts also warned that Trump’s 90-day extension of the US-China trade truce could prolong uncertainty and pose a more persistent risk to inflation, clouding the outlook for Fed policymakers.