Take Two: US inflation eases in July as Eurozone edges into growth in Q2 — BNP Paribas AM

US inflation slowed again in July and Eurozone economic output showed a modest rebound in the second quarter, according to a note from BNP Paribas Asset Management that frames the developments for investors and policy watchers.

Quick takeaways from the BNP Paribas AM note

BNP Paribas Asset Management reported two headline points:

• US annual inflation, measured by the consumer price index, eased to 3.4% in July from 3.5% in June, and core inflation (excluding food and energy) fell to 2.5% from 2.6%.
• The Eurozone economy expanded by 0.4% in the second quarter versus the prior quarter, confirming an earlier estimate, while employment in the currency area rose 0.1% in Q2 and 0.5% year-on-year.

Why the US numbers matter

BNP Paribas AM notes the sequential cooling in headline and core CPI adds to market expectations that the Federal Reserve is likely to keep its policy rate unchanged at its next meeting. The note observes that the Fed had most recently left its target rate range at 3.5%–3.75% and highlighted that inflation remained above the Fed’s 2% objective — language that has influenced market pricing around future rate moves.

Eurozone recovery is modest but broadening

Eurostat’s confirmed 0.4% quarter-on-quarter growth in Q2, cited in the BNP Paribas AM piece, follows a flat first quarter and is accompanied by small employment gains. BNP Paribas AM presents the release as evidence the euro-area economy moved back into expansion during the spring quarter, though at a modest pace.

Market and policy context offered by BNP Paribas AM

The investment manager places the data into a wider market backdrop. It highlights subdued equity volatility — noting the VIX trading near year-to-date lows — and lower bond market turbulence compared with earlier in the year, even as 10-year US Treasury yields rose above 4.70% in July and produced a negative return for the month. BNP Paribas AM also flags that central-bank policy expectations have been affected by the inflation trajectory.

Other points raised in the note

• BNP Paribas AM summarised several international data items due this week, including Canadian inflation, Japanese preliminary Q2 growth, minutes from the Federal Open Market Committee, and flash purchasing managers’ indices for major economies.
• The note included a lighter item on the 40th anniversary of The Economist’s Big Mac Index and its use as a purchasing-power-parity indicator, noting Switzerland and Indonesia as the most and least expensive countries in that index respectively.
• BNP Paribas AM also discussed—without attribution to BEA data in the note itself—broader US macro developments cited elsewhere, including slowing US GDP growth in Q2 and readings on PCE inflation; those points appear alongside market commentary in the firm’s regular briefing format.

How this affects US investors and policy watchers

For US investors, the BNP Paribas AM note suggests the July CPI print supports the view that the Fed can afford to pause further tightening, because both headline and core inflation are easing. At the same time, the note underscores that inflation remains above target, which keeps the possibility of future rate action on the table if the data trend reverses.

Unresolved questions and caveats

BNP Paribas AM’s summary is descriptive rather than decisively prescriptive. It highlights the immediate market reaction and policy implications but does not make firm forecasts about the path of rates or growth. The note’s treatment of US GDP and PCE measures refers to other data releases and commentary; those items are not presented as BNP Paribas AM’s authoritative BEA readings in the note and should be read alongside official releases from US agencies.

Timeline of the recent data cited

1. June: US annual CPI was reported at 3.5% (BNP Paribas AM cites the July slowdown from this level).
2. July: CPI slowed to 3.4%; core CPI to 2.5% (BNP Paribas AM report dated 17 August 2026).
3. Q2 (Eurozone): GDP rose 0.4% quarter-on-quarter and employment increased 0.1% in Q2 (Eurostat figure confirmed and cited by BNP Paribas AM).

Bottom line

BNP Paribas Asset Management frames July’s US CPI slowdown and the confirmed Eurozone Q2 expansion as supportive of a market narrative that central banks can be patient, but it underscores remaining uncertainty: inflation is still above target in the US and growth in Europe is modest. Policymakers and investors will be watching upcoming data releases, including FOMC minutes and regional inflation prints, for signals on whether disinflation continues.

Citation anchors:
"US annual inflation slowed to 3.4% in July" — source 2
"core inflation... eased, to 2.5% in July" — source 2
"The Eurozone economy grew by 0.4% in the second quarter" — source 2
"employment increased by 0.1% in the Eurozone over Q2" — source 2