US equities rallied after data showed signs that US consumer prices, while still elevated, had started to slow, supporting the view that inflation might have peaked. Headline CPI came in flat month over month and below the consensus estimate. On an annualized basis, headline inflation was 8.5%. Core inflation, which excludes volatile food and energy costs, was also below estimates. Meanwhile, the year-over-year increase in the producer price index fell 50 basis points sequentially to 9.8% in July, registering the first pullback in the headline number since April 2020. Fed officials reiterated that there is still work to do but investors are now pricing in lower rate hikes this year. All the sectors in the S&P 500 advanced, led by energy stocks. Small caps outperformed large caps. In Fixed Income, the US yield curve steepened as the front-end eased while longer-term yields rose modestly. In Europe, the STOXX Europe 600 Index ended the week 1.2% higher as fears of more aggressive interest rate hikes eased. Industrial production in the euro area rose for a third consecutive month in June. Months of drought in Europe are severely affecting energy production, agriculture, and river transport. UK economy shrinks less than feared; rates may have to rise again, says BoE’s Ramsden. In Asia, Chinese stocks markets ended the week on a mixed note as a flare-up in covid cases offset news of a record trade surplus last month and a central bank report signaling support for growth.