In the US, consumer prices rose by +8.5% year-on-year in July. This means that the pace of inflation has slowed more than economists had anticipated (consensus +8.7%). As recently as June, the US inflation rate reached +9.1%, its highest level in over 40 years. The main reason for the easing was the decline in energy prices (-4.6% versus the previous month) and especially in gasoline prices in the US (-7.7%). However, food prices rose in July, up +1.1% on the previous month. The interest rate turnaround is also likely to have had a certain dampening effect. The core inflation rate, i.e. excluding energy and food prices, was +5.9% in July after +6.1% in June.
At midweek, investors on Wall Street showed relief in view of the decline in inflation and the prospect of a possible more moderate interest rate hike by the Fed in September. The Dow Jones Industrial closed +1.63% higher at 33,309.51 points and the S&P 500 gained +2.13% to 4,210.24 points. Among other things, the quarterly results of Walt Disney contributed positively. In particular, the subscriptions at the streaming business Disney+ were stronger than anticiapted. Even stronger were the daily gains on the Nasdaq, where the indices were +2.8% higher than the previous day.
In Asia, the stock indices followed most of the positive guidance from overseas. While the Japanese stock exchange remained closed for a holiday, the Hang Seng Index in Hong Kong rose +1.8% and the markets on the Chinese mainland also traded higher. The Shanghai Composite was up around +1.2% and the Shenzhen Component climbed around +1.6%.
The US dollar and capital market rates in the United States weakened after the release of US consumer price data. The euro rose above 1.03 against the greenback, the highest level since early July. On the US bond market, the yield on ten-year Treasuries stood at just under 2.8%.
Inflationary pressures in Germany intensified in July on an EU-harmonized basis. On a year-on-year basis, consumer prices rose by +8.5% in July, compared with an inflation rate of +8.4% in June. Compared to the previous month, the cost of living increased by +0.8% on average. Excluding the alignment with the European price index, the inflation rate in Germany declined to +7.5% in July from +7.6% in the previous month.
|14:30||US||Producer Prices (July, y/y)||+11.3%|
|14:30||US||Initial Jobless Claims (weekly)||260,000|
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Source: LGT Bank (Switzerland) Ltd.
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