Fed policy: Inflation report's impact on rate hikes

What happened: The New York Fed's July survey found Americans' inflation expectations largely unchanged. Meanwhile, a hotter-than-expected Consumer Price Index (CPI) print on August 12 could sway Fed Governor Kevin Warsh to support a September rate hike. The Cleveland Fed expects inflation to grow again in July and August, potentially dividing the Federal Open Market Committee (FOMC).

Market impact: Energy stocks and ETFs like XLE could face pressure if inflation expectations rise, as higher rates could slow economic growth and reduce demand for oil. Conversely, Treasury yields and the USD may strengthen, impacting interest rate-sensitive sectors like Utilities and Real Estate.

What to watch next: The August 12 CPI release will be crucial, as a hot print could push Warsh to advocate for a September rate hike at the FOMC's September 15-16 meeting. Additionally, the FOMC's Summary of Economic Projections (SEP) on September 21 will provide insights into the committee's inflation outlook and potential policy changes.