August CPI Lands at 3.4%, Pushing Fed Hike Odds Below 50%

The Bureau of Labor Statistics released August consumer price data Friday morning, showing headline inflation up 3.4% from a year earlier and 0.1% on the month. Core CPI, which strips out food and energy, rose 0.2% month over month for a 2.5% annual rate. Both readings landed close to consensus forecasts, and shelter remained the largest single monthly contributor.

The print matters more than usual because it is the last inflation reading the Federal Open Market Committee will see before its September 15-16 meeting. Headline inflation has now cooled from 3.8% to 3.4% over three months, and the annual core rate is drifting toward the Fed's 2% objective even as energy costs stay elevated. Following the release, CME FedWatch odds of a 25-basis-point hike next Wednesday slipped below 50%, down from roughly 60% earlier in the week.

The shift matters for rate-sensitive corners of the market. Net lease REITs and precious metals miners have traded inversely to Treasury yields for much of the quarter, while banks have leaned the other way. Long-term yields held steady after the print, and the September meeting carries an updated Summary of Economic Projections, including the dot plot of where policymakers expect rates to settle.