## [# CPI in Focus as Fed Rate Cut Bets Lift AGG, TLT](/sections/features/cpi-focus-fed-rate-cut-bets-lift-agg-tlt)
# CPI in Focus as Fed Rate Cut Bets Lift AGG, TLT
CPI data will be released on Tuesday.
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[By Sumit Roy ](/authors/sumit-roy)
Aug 11, 2025
Edited by: ETF.com Staff
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Investor expectations for a September rate cut could crystallize this week, with the Bureau of Labor Statistics set to release its July Consumer Price Index (CPI) report on Tuesday.
The odds of a Federal Reserve rate cut surged following the release of the July jobs report earlier this month, which came in soft and included sharp downward revisions to employment data from May and June.
According to the CME FedWatch Tool—which tracks rate expectations using fed funds futures—markets are now pricing in more than a 90% chance that the Fed cuts interest rates at its next meeting.
Bond ETFs have rallied alongside the shift in rate expectations, with the[ **iShares Core U.S. Aggregate Bond ETF (AGG)**](/agg) and the [**iShares 20+ Year Treasury Bond ETF (TLT)**](/TLT) each gaining nearly 1% since the start of the month.
But while expectations are high, the outcome isn’t locked in.
Fed Chair Jerome Powell and other officials have reiterated that inflation remains a key concern, especially in light what’s shaping up to be the largest wave of tariff hikes since the Great Depression.
At the same time, the recent labor market data suggests that job growth has slowed dramatically, with near-zero gains in the revised May and June figures.
That puts the Fed in a tricky spot. While inflation is still above the central bank’s 2% target, weakening employment may be pushing rate cuts higher on the Fed’s priority list.
That outlook could shift again depending on what the next inflation report reveals.
Economists expect Tuesday’s CPI report to show that overall prices rose 0.2% month-over-month in July, matching the pace in June. Core CPI, which excludes volatile food and energy prices, is forecast to rise 0.3%, up from 0.2% in June. That would mark the fastest pace of core inflation since January.
Year-over-year, headline CPI is expected to increase to 2.8%, up from 2.7% in June, while core CPI is forecast to tick up to 3% from 2.9%. That would be the highest core reading since February, but only modestly above the multi-year low of 2.8% seen in March, April, and May.
Still, Tuesday’s CPI report won’t be the final word on the state of the economy before the Fed’s September 17 decision.
At the end of August, the Bureau of Economic Analysis will release the July reading of the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge.
Then, in early September, investors will get the August jobs report and the August CPI, both of which could significantly influence the Fed’s calculus.
In other words, while the data seems to be pointing toward a rate cut, the window for surprises remains wide open.
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[ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy)
Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including… [View Bio](/authors/sumit-roy)
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