Market expects world power inflation to have already peaked, although underlying data is expected to recover
European stock markets are waiting practically motionless for US inflation data, which will mark the Federal Reserve’s (Fed) monetary policy decision at its next meeting in September. The Ibex-35 maintains its 8,300 point gain with Solaria, ArcelorMittal and Meliá Hotels leading the top of the table with gains of over 1%.
However, everything could change if the US CPI falls short of expectations. Analyst consensus expects the benchmark to moderate in July, from 9.1% in June to 8.7% yoy. Similarly, core inflation (excluding energy and food) is expected to be higher than the previous month’s (6.1% vs. 5.9%).
“Reading this variable will provide investors with greater clarity on both the current state of the global economy and the path the Fed will take in interest rates,” Link Securities analysts said.
With the prospect of the agency continuing its monetary policy tightening plan, bond yields (which move inversely with price) had been rising for several sessions. On Wednesday, US 10-year bond yields moderate to 2.77%. In Europe, the German benchmark (bund) fell more sharply, to 0.88%, still far from the 1% it well exceeded a few weeks ago.
Paolo Zangheri, Senior Economist, Generali Investments, notes that “although the Fed unanimously decided in July to increase further by 75 basis points, this signaled that the pace of tightening could be slower going forward if inflation is not positive. surprised, as the slowdown in the economy will gradually restore the imbalances between supply and demand”.
As he recalls, the organization’s president, Jerome Powell, pointed out that the interest rate path outlined in June, with the Fed funds rate reaching a maximum of 3.8% and remaining at that level in 2023, remains relevant. This conveys two messages: first, the rate hikes continue; Second, and more importantly, the price the market has already imposed on rate cuts in 2023 is too extreme.
In the commodities market, the price of oil remains stable with a barrel of Brent above $96 for the third consecutive session. For its part, US West Texas costs around $90.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
