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WEEKLY SUMMARY: Cooling inflation supports the case for Fed patience.
Of the major benchmarks, the Russell 2000 performed best, up 1%, while the S&P 500 Index posted more modest gains. The Dow Jones Industrial Average finished the week lower, and the Nasdaq Composite was little changed. U.S. inflation showed further signs of cooling in July. Annual headline and core inflation CPI were in-line with estimates and eased for a second straight month. Producer prices were softer than expected.
The data reduced fears of another Fed rate hike. September hike odds fell to ~32% from ~52%. By Friday, shorter-term US Treasury yields were generally lower on the week, while longer-term yields remained elevated amid heavy supply and persistent fiscal concerns. Thursday’s 30-year bond auction cleared at its highest yield since 2001.
In the rest of the world, the STOXX Europe 600 Index ended the week down 0.36% in local currency terms. Japan’s stock markets registered substantial gains over the week, with the Nikkei 225 rising 4.74%. Strong technology earnings, led by memory companies, were a key driver of market momentum. Meanwhile, speculation grows that BoJ interest rate hike could be imminent.
The dollar weakened, oil surged while gold was firm.
Have a great weekend
Charles & Syz Research Lab
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