📰 What’s moving Markets?

Stocks:

• U.S. consumer prices data for July has been milder than feared, promoting hopes that the Federal Reserve will not adjust interest rates in September. Headline CPI came in at 3.2% YoY against expectations of 3.3% YoY.

• Major tech stocks like Amazon, Microsoft and Apple increased between 0.5% and 1.5% during the day but sold off towards the end of the trading session.

• In Europe, markets closed higher yesterday with France’s CAC 40 gaining 1.5% and the EuroStoxx 50 gaining 1.6%, while the FTSE 100 closed 0.41% higher.

Bonds:

• Yield on the benchmark 10-year treasury note slightly increased, reaching 4.02%; however, the 2yr treasury yield decreased on the weak inflation print to 4.78%.

• The Federal Reserve has, since March 2022, elevated its benchmark overnight interest rate by 525 basis points to its present range between 5.25% and 5.50%.

FX:

• The dollar weakened against a basket of currencies after the inflation data release. GBPUSD currently trades at 1.27; EURUSD at 1.10.

• Nevertheless, the dollar managed to rally 0.50% against the Yen to 144.5.

Commodities:

• The CPI report indicates an increase in prices for eggs, beef, dairy, fruits, and vegetables. The energy products' cost edged up by 0.1% with gasoline prices showing a mild rise.

• Positive U.S. inflation data led to a boost in commodity prices: Platinum surged by 2.56% to $912.80/oz and Palladium climbed 4.70% to $1,292.50/oz.

• Brent crude dropped slightly by 0.54% to $86.88 per barrel, but this is still close to its peak level since January.

📊 Chart of the Day

There is an uncanny resemblance between US inflation during 1966 and 1982 and current inflation since 2013. It’s probably nothing…

US CPI YoY (1966-1982 and 2013-current)

🤿 Deep Dive

The FTSE 100 dropped 1.6% yesterday as UK wage growth came in higher than expected, fueling inflation concerns.

If you’re pressed for time, here’s the TL;DR:

• UK's 2023 GDP growth projected at 0.4%; 0.3% in 2024, with potential recession risks by end of 2024.

• Inflation forecasted above target, hitting 5.2% by 2023 and 3.9% in 2024; core inflation at 6.9% indicates upward risks.

• Anticipated 25 basis point rise in Bank Rate to 5.50%; clear communication essential for market stability.

• Stagnant productivity heightens financial vulnerabilities for lower-income households; income inequality widening.

• Real wages in regions like East of England and West Midlands to remain below pre-pandemic levels by 2024's end.

• Expected unemployment rate of 4.7% in 2024, peaking at 5.1% by 2026.

📆 Coming up this Week

Monday 7th August

• Germany Industrial Production MoM consensus: -0.4%, last: -0.2%, actual: -1.5%

• China Trade Balance consensus: 625.25M, last: 491.25M, actual: 575.5M

Company Earnings: Paramount (beat), Palantir (in line), Lucid (miss), KKR (beat)

Tuesday 8th August

• Germany Headline CPI YoY consensus: 6.2%, last: 6.4%, actual: 6.2%

• France Trade Balance consensus: -8.0B, last: -8.4B, actual: -6.7B

• United States Trade Balance consensus: -65.70B, last: -69.00B, actual: -65.50B

Company Earnings: UPS (beat), AMC (beat), Lyft (beat), Fox (beat), Coupang (beat), Twilio (beat)

Wednesday 9th August

• China Headline CPI YoY consensus: -0.5%, last: 0.0%, actual: -0.3%

• China PPI YoY consensus: -4.0%, last: -5.4%, actual: -5.4%

Company Earnings: Roblox (miss), Disney (beat), Sony (beat), E.On (beat)

Thursday 10th August

• Japan PPI YoY consensus: 3.5%, last: 4.1%, actual: 3.6%

• United States Initial Jobless Claims consensus: 231K, last: 227K, actual: 248k

• United States Headline CPI YoY consensus: 3.3%, last: 3.0%, actual: 3.2%

• United States Core CPI YoY consensus: 4.7%, last: 4.8%, actual: 4.7%

Company Earnings: Alibaba (beat)

Friday 11th August

• United Kingdom GDP QoQ consensus: 0.0%, last: 0.1%

• United Kingdom GDP YoY consensus: 0.2%, last: 0.2%

• United Kingdom Industrial Production YoY consensus: -2.1%, last: -2.3%

• United Kingdom Manufacturing Production consensus: -1.0%, last: -1.2%

• France Headline CPI YoY consensus: 4.3%, last: 4.5%

• United States Core PPI YoY consensus: 2.3%, last: 2.4%

• United States PPI YoY consensus: 0.7%, last: 0.1%