July CPI rises 0.1% monthly, markets lower odds of Fed rate hike in September amid inflation risks.

July's Consumer Price Index (CPI) increased by 0.1% month-over-month and 3.4% year-over-year, leading markets to reduce expectations of a Federal Reserve rate hike in September. Despite this, risks of tighter monetary policy remain due to energy-driven inflation and the potential for a prolonged energy supercycle. The labor market's current weakness is crucial; if it remains soft, it may prevent further Fed tightening despite ongoing inflation concerns. Investors are advised to stay fully invested but prepare for volatility, with future Fed moves likely dependent on upcoming labor data.