Futures grind higher into the open as an in-line CPI print takes the September hike tail off the table and lets the AI trade run.
July CPI landed at 3.4% year-over-year versus 3.4% consensus and 3.5% prior, with the monthly print flat, enough to reaffirm the Fed's steady-rate camp without reviving cut bets. ES is up roughly a quarter percent and NQ is outperforming near 0.3-0.7% after Coreweave and Super Micro earnings extended confidence in the data-center capex cycle. Indicative SPY gamma sits with a flip near 688 and dealers likely long gamma into a call wall around 695-700, meaning dips get bought and rallies get capped absent a data shock; QQQ support sits near 605 tied to the mega-cap AI complex. VIX is pinned near 15, a level the tape has flagged as unusually calm given SPX is sitting at records, so realized vol is cheap to buy here even as it keeps grinding higher.
Today's single catalyst is the CPI reaction itself, with September Fed odds effectively a coin flip between hold and hike heading into the print and now tilting back toward hold on the in-line read. What's priced in: no immediate policy shift, continued AI capex tailwind, and Treasury yields staying elevated but not accelerating. Oil and Middle East headline risk (Houthi attack reports) remain a tail hedge rather than the base case.
The risk: a hotter core services or shelter component buried in the CPI internals, or a hawkish Warsh-aligned Fed commentary later today, flips this from low-vol grind to a hike-repricing selloff, especially with long bond yields already near two-decade highs and little room for a duration shock.