- US stocks traded mixed as participants digested the latest CPI data which mostly printed in line with expectations and failed to live up to the dovishness of the recent PPI release although there were no signs of concern within the report, while the data did very little to alter Fed rate expectations with September seen as a guaranteed cut.
- USD was ultimately flat on the day and lacked decisiveness after the CPI data which mostly matched estimates, while the attention turns to upcoming Fed speakers on Thursday and several key US data releases including Retail Sales, Industrial Production and Initial Jobless Claims.
- Looking ahead, highlights include New Zealand Electronic Card Retail Sales & Food Price Index, Japanese GDP, Australian MI Inflation Expectations and Employment Data, Chinese Industrial Production & Retail Sales, Comments from RBNZ Governor Orr, South Korean & Indian Markets are Closed for Holiday.
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LOOKING AHEAD
- Highlights include New Zealand Electronic Card Retail Sales & Food Price Index, Japanese GDP, Australian MI Inflation Expectations and Employment Data, Chinese Industrial Production & Retail Sales, Comments from RBNZ Governor Orr, South Korean & Indian Markets are Closed for Holiday.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stocks traded mixed as participants digested the latest CPI data which mostly printed in line with expectations and failed to live up to the dovishness of the recent PPI release although there were no signs of concern within the report, while the data did very little to alter Fed rate expectations with September seen as a guaranteed cut.
- SPX +0.38% at 5,455, NDX +0.09% at 19,023, DJIA +0.61% at 40,008, RUT -0.52% at 2,084
- Click here for a detailed summary.
NOTABLE HEADLINES
- Fed's Goolsbee (non-voter) said climbing unemployment may indicate a worsening job market, while he added that policy is 'very restrictive' and the economy is not overheating. Furthermore, he said economic conditions will warrant the size of rate cuts and he is more concerned about jobs mandate 'on the margin'.
- WSJ's Timiraos noted regarding what July CPI means for the Fed which he stated makes a September rate cut from the Fed as close to a lock as these things get and makes it easier at the margin to avoid dissents on the first cut. Furthermore, he said the report doesn't resolve the debate over whether to start with 25bps vs 50bps and suggested would probably need to see something bad in the labour market for a 50bps. Furthermore, he said a big question for the September FOMC will be how many rate cuts are pencilled in for the rest of the year and mild inflation readings could make a three-cut baseline more likely.
- White House Economic Adviser Bernstein said inflation is trending in the right direction.
DATA RECAP
- US CPI MM, SA (Jul) 0.2% vs. Exp. 0.2% (Prev. -0.1%)
- US CPI YY, NSA (Jul) 2.9% vs. Exp. 3.0% (Prev. 3.0%)
- US Core CPI MM, SA (Jul) 0.2% vs. Exp. 0.2% (Prev. 0.1%)
- US Core CPI YY, NSA (Jul) 3.2% vs. Exp. 3.2% (Prev. 3.3%)
FX
- USD was ultimately flat on the day and lacked decisiveness after the CPI data which mostly matched estimates, while the attention turns to upcoming Fed speakers on Thursday and several key US data releases including Retail Sales, Industrial Production and Initial Jobless Claims.
- EUR gradually edged higher and printed a fresh 7-month high against the dollar at the 1.1000 handle.
- GBP was mildly pressured in the aftermath of the softer-than-expected UK inflation data.
- JPY price action was choppy in which USD/JPY continued to oscillate around the 147.00 level.
FIXED INCOME
- T-notes settled with mild gains albeit with price action indecisive following mostly inline CPI data.
COMMODITIES
- Oil prices were lower with price action somewhat choppy as geopolitics remained in focus, while inventory data showed a surprise build in crude stockpiles.
- US EIA Weekly Crude Stocks w/e 1.357M vs. Exp. -2.0M (Prev. -3.728M).
- Libya's Waha oil field (285k BPD) output capacity is reportedly seen dropping to 100k BPD, according to Bloomberg.
- Iraq signed initial deals for 13 oil and gas exploration blocks and fields which will add 750k bbls of crude and 850 MSCF of gas, according to the oil ministry.
- BHP (BHP AT) Escondida union said the strike is keeping Los Colorados concentration and electrowinning plants totally offline, while BHP and the striking union failed to resume formal negotiations. Furthermore, BHP said it asked the Escondida union in Chile to suspend the strike temporarily to resume dialogue although the union declined.
GEOPOLITICAL
MIDDLE EAST
- Gaza ceasefire negotiations are to take place in Doha on Thursday involving officials from Israel, Qatar, US and Egypt, while mediators expect to consult with Hamas following Doha ceasefire talks.
- Hamas clarified that its representatives will not participate in Thursday's talks and will meet with mediators after receiving an update, according to Axios.
- US White House Envoy Hochstein's meetings in Lebanon have a "positive" atmosphere, according to Al Arabiya citing sources.
- Iran’s Supreme Leader Khamenei said a non-tactical retreat against Israel would be a "grave mistake".
- A major cyberattack targeted the Central Bank of Iran (CBI) and several other banks which resulted in widespread disruptions for the country’s banking system, according to Iran International.
OTHER
- Ukrainian President Zelensky said they may have to impose martial law in Russia's Kursk region, according to Walla News' Elster.
- Ukraine carried out a major drone attack on four Russian military airfields, according to a Ukrainian security source via Reuters.
EU/UK
NOTABLE HEADLINES
- German foreign trade is likely to be rather subdued for the foreseeable future, according to the German Economy Ministry's monthly reports.
DATA RECAP
- UK CPI YY (Jul) 2.2% vs. Exp. 2.3% (Prev. 2.0%)
- UK Core CPI YY (Jul) 3.3% vs. Exp. 3.4% (Prev. 3.5%)
- UK CPI Services YY (Jul) 5.2% vs. Exp. 5.5% (Prev. 5.7%)
- EU GDP Flash Estimate QQ (Q2) 0.3% vs. Exp. 0.3% (Prev. 0.3%)
- EU GDP Flash Estimate YY (Q2) 0.6% vs. Exp. 0.6% (Prev. 0.6%)
- EU Industrial Production MM (Jun) -0.1% vs. Exp. 0.5% (Prev. -0.6%, Rev. -0.9%)
- EU Industrial Production YY (Jun) -3.9% vs. Exp. -3.0% (Prev. -2.9%, Rev. -3.3%)
- EU Employment Flash QQ (Q2) 0.2% vs. Exp. 0.2% (Prev. 0.3%)
- EU Employment Flash YY (Q2) 0.8% vs. Exp. 1.0% (Prev. 1.0%)
