The upcoming U.S. inflation report for June, set to be released on Thursday, is poised to be a pivotal event for financial markets. This report could significantly influence the Federal Reserve’s decision on interest rate cuts, potentially impacting the timing of the first cut. A lower-than-expected inflation reading might encourage Fed Chair Jerome Powell to signal a rate cut in September, or even open the possibility of a cut as early as July. Conversely, a higher-than-anticipated inflation figure could halt the current stock market rally. The report’s importance is heightened by its potential to affect various market sectors, including stocks, Treasury debt, and even the presidential election race, making it a focal point for investors and economists alike.