06:18 AM EDT, 08/12/2024 (MT Newswires) -- US equity investors will look out for the consumer and produce price inflation data this week to confirm the disinflation trajectory after the July nonfarm payrolls sparked concern the Federal Reserve could be behind the curve in easing monetary policy.

* Jefferies expects the July headline and core consumer price inflation due Wednesday in line with consensus, according to a note Sunday. Energy goods will likely generate a "modest" drag on the headline, while food prices will probably offset some of the drag from gasoline on the headline, Jefferies economists said. "Shelter costs were very stubborn earlier this year, but the June data showed that supply of multi-family homes coming online is finally starting to weigh on the CPI," Thomas Simons and Nathan Bilski said. "We expect a similar tone in July, and likely for the remainder of the year." Producer price data is due Tuesday.

* The Jefferies note said that US retail sales will be out Thursday, and a rebound in auto is likely because of the detrimental one-off impact of the cyberattack in June. Outside of autos, Jefferies is "not expecting a strong report."

* As of early Monday morning, the probability of a 25 and a 50 basis points Fed interest-rate cut on Sept. 18 is split equally, according to the CME Group's FedWatch Tool.

* Last week, US equity indexes fell as a sell-off on Monday led by gloomy July payrolls outweighed gains in the remainder of the week from relatively strong economic data and helpful comments from Bank of Japan Deputy Governor Shinichi Uchida on the yen carry trade. Treasury yields, however, recovered from the plunge on Monday last week, reflecting the need for more data to confirm significant economic weakness ahead.

* "While employment gains have clearly slowed from earlier peak levels, labor market metrics remain solid," according to a Stifel report. "This is potentially a reflection of normalizing conditions as opposed to an early warning sign of an ensuing collapse in employment."