US and global stocks rebound further, as US inflation cools

Macroeconomic/ geopolitical developments

• Major US and global stock indices surged this week, driven by easing US inflation, stronger-than-expected economic data, and renewed investor confidence in a potential soft landing for the economy.
• The July CPI report showed inflation rising by just 2.9%, the lowest since March 2021, boosting market optimism and reinforcing expectations of a potential Fed rate cut in September as inflationary pressures ease.

• Stronger-than-expected July retail sales, along with a decline in jobless claims, have eased fears of a US economic downturn, boosting investor confidence and reducing expectations for aggressive Fed rate cuts.
• This week, market attention is centred on the FOMC Meeting Minutes and the Jackson Hole Symposium, where Fed Chair Jerome Powell’s speech is anticipated to offer key insights into the timing and extent of potential interest rate cuts, with a focus on the labour market’s impact on future policy decisions.

Global financial market developments

• US and global equity averages surged higher
• US and European bond were little changed on the week, slightly higher in yield
• The US Dollar Index was lower, near multi month lows.
• Gold futures rallied, back towards record levels
• Oil futures sold off, after earlier August gains

Key this week

Central Bank Watch: The main focus will be on FOMC Minutes on Wednesday and Jackson Hole Symposium from Thursday. Other central bank activities this week are the People’s Bank of China Interest Rate decision on Tuesday and the  Reserve Bank of Australia Meeting Minutes also on Tuesday.

Macro Data Watch: The key macro data releases this week are the global Flash PMI data on Thursday and the EU, Canadian and Japanese CPI data throughout the week.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued