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US-Iran situation vs. inflation data: Who is the market's pricing logic? In yesterday's macro framework, I already explained that this week is mainly inflation data, as this determines the market's recent expectations for interest rate adjustments. However, energy price fluctuations stimulated by the US-Iran situation remain the biggest potential uncertainty. Simply put, energy prices are too volatile, so the market's pricing logic depends on crude oil prices. Once oil prices stabilize, market expectations will return to tomorrow's CPI data. Since last night, the market has been in a state of "torn apart" by uncertainty, and the outlook for July CPI data is not optimistic With employment cooling and initial risks emerging, whether rate cut expectations can be driven depends on the CPI. Currently, the CPI expectation is a decline in the annualized rate, but a rebound in the monthly rate. #财报观察员: AI infrastructure earnings report debuts in succession. #本周三CPI公布, will the pricing for a rate hike in September be rewritten? To put it bluntly, this data forecast tells the market that medium- to long-term inflation is slowing, but short-term inflation is rebounding, making it sticky and possibly even having a secondary transmission of energy prices. This data would weaken the probability of rate cuts caused by weak employment, so CPI expectations are more unfavorable for risk markets. Under this premise, the political rivalry between the US and Iran has led to further increases in energy prices, triggering renewed concerns about inflation and worsening the risk market. However, Pakistan's statement temporarily eased the rebound in energy prices. Next, before the CPI data is released, it is a process of easing pressure for risk markets, and the relief comes from two sources