CPI Preview: Market Pre-Traded A Low Print, "Equity Risk Is To The Downside"

One month ago, when previewing the June CPI report, we said that based on the barage of leaks by the Fed's mouthpiece Nikileaks, it was only a matter of time before we got a big enough miss to trigger the September rate cut machinery. Specifically, this is what we said:

With Nick Timiraos having published not one but two September rate cut previews in 24 hours, the writing is on the wall: while the Fed may not cut at the July FOMC meeting, it will make it abundantly clear that a cut in September is assured. Which also means that tomorrow's CPI number is virtually assured to come in line or just below estimates. It's also why after coming in hotter than expected much of early 2024, tomorrow's core CPI print will be the third consecutive miss to consensus estimates.

A miss it was - and what a miss, with headline CPI declining 0.1% MoM, the most since June 2020 - and it served as justification for the Fed's latest dovish pivot at the July FOMC which together with the dismal payrolls report a few days later, prompted an aggressive spike in rate cut expectations.