CPI in July Puts Pre-Markets in a Good Mood

Tuesday, August 12, 2025

Pre-market futures are rising from modest levels in the green this morning, a direct result of seeing better-than-expected Consumer Price Index (CPI) numbers in the July report ahead of the opening bell. Just prior to this important economic release — including an updated Inflation Rate — we were +44 points on the Dow, +7 on the S&P 500 and +38 on the Nasdaq, currently we are +275 points on the Dow, +43 points on the S&P 500 and +190 points on the Nasdaq.

The small-cap Russell 2000 is up +1.24%, or +27 points on the news, the biggest jump of all the major indexes this morning. We’re also seeing bond yields tick up on the news, by nearly 30 basis points (bps) on the 10-year to 4.27% — now back up over the median level of the past year, after spending the month of August below it so far — and +10 bps to 3.73%. 

Part of this relief rally may also be due to yet another reprieve on Chinese tariffs from over the weekend, kicked out another 90 days to November 10th. Recall that post-“Liberations Day,” China was suffering the wrath of President Trump and was looking at +145% tariffs on imported Chinese goods, which for many American companies make up more than 50% on its inventory. But this was initially pushed out to July 9th, then August 1st, then August 12th (today), now November 10th.

Thus, this morning’s good news — aligned with an overall better-than-expected Q2 earnings season now on the “back nine” — is multi-factorial: tariff inflation has yet to hit the economy in the mouth (and according to some, maybe never will) and tariff policy continues to push out further down the calendar. Not a bad set-up for a nice day for the stock market.

CPI for July Mostly In-Line

Headline month-over-month Consumer Price Index (CPI) for the month of July came in at +0.2%, in-line with expectations and 10 bps lower than June’s +0.3%. Core CPI month over month — subtracting volatile food and energy prices — was also in-line with estimates at +0.3%, +10 bps from the previous month.

Year over year CPI on headline, aka the “Inflation Rate,” was lower by 10 bps from expectations to +2.7%, in-line month over month. This figure remains in the pocket between recent lows (+2.3% in April) and +3.0% in January. Core CPI year over year was the highest print of this series, +3.1%, the largest number since February and +20 bps higher month over month.

Thus, a positive attitude from market participants on inflation this morning. We’re not seeing tariffs appear in things like apparel at this point, energy prices have remained lower, and owner’s equivalent rent have kept steady. Furnishings and Services, meanwhile, have begun to show some signs of inflation.

Q2 Earnings Before the Bell: ONON, SFD, TME

On Semiconductor ONON shares are up +14% in early trading on +32% net sales growth year over year, led by +47.2% in Direct-to-Consumer (DTC), +47.2%, and Adjusted EBITDA +220 bps to +18.2%. But the bottom line provided a big -145.8% earnings miss to -$0.11 per share. 

Meanwhile, Smithfield Foods SFD missed earnings estimates by a penny to 55 cents per share, helping send the stock down -3% so far this morning, even as the company’s operating profit outlook improved. Tencent Music Entertainment TME beat estimates by +15% this morning, and shares are up +7% on the news.

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