Hey folks we are still watching the softness in the markets play out as I said it would in the month of August and possible into September. But thus far I am still looking at a buying opportunity coming up but we must pay attention the trading volume and keep price levels. Get my take in this week’s round-up.
WEEKLY SOUND BITS
US indexes ended mixed for the week, as investors weighed inflation data against worries over the recent rise in long-term interest rates with value stocks outperforming growth stocks giving the narrowly focused Dow a modest gain.
The week’s economic calendar included some closely watched inflation data. On Thursday, stocks jumped at the start of trading on news that the Labor Department’s CPI rose 0.2% in July, bringing its year-over-year increase to 3.2%, a tick below expectations. Enthusiasm over the CPI data appeared to wane as the day wore on, however, and stocks were mixed on Friday, following news that producer prices rose 0.3% in the month, a tick above expectations. On a year-over-year basis, producer prices rose 0.8%, well below the Federal Reserve’s overall consumer inflation target of 2%. July marked the first annual increase in the rate of producer price inflation in over a year, however.
The producer price report pushed the yield on the benchmark 10-year Treasury note higher to end the week.
In Europe we got better than expected economic data out of the UK showing that GDP grew 0.5% sequentially in June, exceeding a consensus forecast for a 0.2% expansion. Strong increases in manufacturing and construction were also important drivers. Q2 GDP surprised to the upside, growing 0.2% versus the previous three months, thanks, in part, to better-than-expected private consumption. Meanwhile, in the remainder of Europe, the ECB said in its latest Economic Bulletin that, since the June interest rate hike, developments have supported the expectation that inflation should moderate in 2023 but still stay above the 2% target for an extended period and remains highly uncertain.
In Japan, economic data developments, including signs of easing inflationary pressure and slowing wage growth, boosted the case for the BoJ to maintain its ultra-accommodative stance. An indicator of inter-company pricing for goods and services, rose 3.6% year on year (y/y) in July, marking the seventh straight month of slowing wholesale inflation. There were signs that the labor market may be losing some steam, as wage growth unexpectedly slowed in June. Nominal cash earnings rose 2.3% y/y, short of consensus estimates of 3.0% y/y growth, while real earnings fell 1.6% y/y, more than the expected 0.9% y/y decline. Until the likelihood of achieving the 2% inflation target rises sufficiently, the BoJ needs to maintain yield curve control while conducting it with greater flexibility.
China’s latest inflation data revealed that consumer and producer prices fell in tandem for the first time since November 2020, underscoring the weak demand throughout the economy. The CPI declined 0.3% in July from a year earlier and slipped into contraction for the first time since February 2021. The PPI fell a worse-than-expected 4.4% from a year ago but slowed from June’s 5.4% decline. The release reinforced concerns that China has entered a deflationary period, which offset optimism about Beijing’s latest efforts to prop up demand after the State Council announced new measures last month to boost consumer spending. Trade and lending data for July came in below expectations and underscored the loss of momentum in China’s post-lockdown recovery. Exports fell a larger-than-expected 14.5% in July from a year earlier, marking the weakest reading since the start of the pandemic in early 2020. Imports shrank by a worse-than-expected 12.4%, almost double the drop recorded in the previous month.
Enjoy this week’s Round-Up;
Don’t Be A Rat Brain Trader – Be the Red Strip Zebra !!
Trade Smart !
hpb
