European equities are doing that thing where they hold perfectly still right before something big happens. The STOXX Europe 600 is sitting near 660 points, flirting with all-time highs and carrying a nearly 12% gain for the year, while investors wait for the US July Consumer Price Index report due out at 8:30 a.m. ET.
The number everyone is watching: 3.4% year-over-year, which would represent a modest step down from June’s 3.5% reading. A small move on paper, but one that could shape the Federal Reserve’s calculus heading into its September meeting.
The inflation puzzle and the Fed’s next move
For European markets specifically, the implications are indirect but real. A dovish signal from the Fed tends to weaken the dollar, which in turn boosts euro-denominated earnings for exporters. A hawkish surprise does the opposite, and European multinationals feel it in their quarterly numbers.
Six months of US-Iran tensions are repricing European risk
