It’s CPI day, and traders will be watching this one closely. Inflation data for July is due at 8:30 a.m. ET, with economists expecting consumer prices to rise 3.4% from a year earlier, down from 3.5% in June. Today’s report is critical ahead of next month’s Fed meeting, as traders remain divided on rate decisions. Last week’s jobs report offered room to hold rates steady, though hotter-than-expected inflation could complicate that. Stock futures are rising, snapping two days of declines, fueled by Core Weave and Super Micro Computer’s blockbuster results, reigniting AI trade enthusiasm. Treasury yields tick lower, the dollar edges up, and oil prices climb toward $90 a barrel as Strait of Hormuz reopening hopes dim. Market sentiment hinges on today’s inflation numbers and their implications for monetary policy.

Traders will closely parse the CPI data for signals on inflation’s trajectory, balancing it against labor market strength. A cooler reading could ease concerns about persistent price pressures, potentially supporting a dovish stance ahead of the Fed’s August meeting. However, any surprise on the upside may reignite rate hike expectations, weighing on equities.

The AI sector remains a focal point, with recent earnings from Core Weave and Super Micro Computer highlighting strong demand for cloud infrastructure. Their results have buoyed risk appetite, offsetting some of the caution from broader market declines.

Oil’s rise to $90 underscores supply chain tensions, as geopolitical risks persist. The dollar’s modest gain reflects safe-haven demand amid uncertainty, while bonds and stocks navigate a balancing act between hope and haste.