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• Regional Fed CPI metrics offered a slightly mixed take on latest changes in Y/Y inflation in July compared to the clearer cut moderation seen in core CPI (2.48% Y/Y, -0.11pp) and headline CPI (3.36% Y/Y, -0.17pp and nearly surprising lower).
• The Cleveland Fed’s main two measures were unchanged on the month although that did admittedly follow a more notable decline back in June.
  • The median held at 2.7% Y/Y for a second month after a latest high of 2.85% in May, back to the 2.7% seen in March at what had been its lowest since Sep 2021.
  • Recent monthly trends are running hotter however, with a six-month average at 3.0% annualized.
  • The 16% trimmed mean held at 2.6% Y/Y for a second month after the 2.9% in May had been its highest since December. Pushing below the 2.64% in March, this is technically the lowest since Apr 2021 whilst a six-month average is only a little stronger at 2.7%.
• For a narrower take of price pressures, the Atlanta Fed’s sticky core CPI ex shelter saw a more notable cooling to 2.23% Y/Y in July from 2.40% in June and 2.9% in May. This is clearly below the 2.7% seen in Feb before the start of the Iran war and is back to its lowest since May 2025 before the impact of tariff policies. 

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We will also get June monthly output data alongside the Q2 print. Bloomberg consensus looks for a -0.1%M/M pullback, after May’s 0.10% upside surprise, which followed an upward revised -0.05% in April. Services output is seen slowing to flat M/M, while IP may see only a modest rebound - whereas construction could see another drop. The Bloomberg mean of -0.02%, strong June retail sales, and the sell-side views we've read skew risks to the upside here.

• A June print of -0.13%M/M is the threshold at which Q2 GDP could round up to 0.4%Q/Q or down to 0.3%. However, it would take a decent upside surprise (around 0.17%M/M) for Q2 GDP to beat consensus (all assuming no revisions).
• By sector, services output is seen flat in June (Bloomberg cons) after May's stronger-than-expected rebound (0.28%M/M). Wholesale and retail trade should see a positive month, after June retail sales surprised to the upside, growing 1.1%M/M (ex-fuel, 1.2% prior) on hot weather and promotions.
• Offsetting this, we could see some reversals lower in categories which drove May strength: arts, entertainment and recreation, professional and scientific activities, alongside another rise in "other service activities".
• Industrial production may only see a very modest bounce, with Bloomberg consensus at 0.1%M/M following -0.54% in May - mostly on a sharp pullback in mining and quarrying, which could reverse in June. Here, Lloyds (who see a stronger 0.4%M/M) point to a stronger rebound in oil/gas extraction activity. The energy aggregate under IP was likely boosted by electricity demand during the heatwave (seen in other European countries).
• Within IP, manufacturing could see another, but more modest, fall of -0.1%M/M (Bloomberg cons), after -0.54% in June, which had followed a run of upside surprises. Deutsche Bank (who see a weaker -0.6%M/M) highlight weaker auto manufacturing and softer manufacturing reports globally.
• For construction, Bloomberg consensus sees a second monthly contraction around -0.4%M/M, but we note a wide range of sell-side estimates here (-1.5% to +0.6%). Recall in May we saw a sharp -0.80%M/M for some delayed payback after Q1 strength. Deutsche Bank point to weak survey indicators in line with a -0.7%M/M drop in June (though BIC data adds upside risk), whereas SocGen look for a rebound of 0.5%M/M on favourable weather conditions.
• On an annual basis, consensus implies annual growth around 0.8%Y/Y (1.32% May), also expected to be mainly services-driven, with modest annual IP growth (mainly on manufacturing), but a large negative rate for construction.