From Marc to Market:
Overview: The focus today is on the US CPI report. Another soft reading is expected, and it may strengthen ideas of a Fed cut in September, which ostensibly give it time to cut again before the end of the year. The dollar is trading with a softer bias against most of the G10 currencies. A stronger than expected May GDP report helped sterling reach new four month high. The greenback is also holding below yesterday's high near JPY161.80 against the Japanese yen. The euro briefly traded above $1.0850 for the first time in almost a month. The intraday momentum indicators for the dollar, warning that follow-through losses may be limited. Most emerging market currencies are firmer, including the Chinese yuan. The three notable exceptions are Türkiye, Mexico, and India, which are nursing small losses.....MUCH MORE
Chinese officials are making it more difficult to short equities and Chinese stocks responded accordingly, with the major indices rallying more than 1%. Most equity markets in the region, but India rose today. Europe's Stoxx 600 is extending yesterday's 0.9% gain with another 0.5% increase today and is now higher for the week. Us index futures are slightly softer. European benchmark yields are narrowly mixed. The French premium over Germany has narrowed slightly. After a well-received auction yesterday, the US 10-year yield is a little lower, trading below 4.28%. Gold held support near $2350 earlier this week and is trading with a firmer bias near $2382. The week's high from Monday was slightly above $2390. September WTI initially extended yesterday's recover from $80 to reach almost $82 today but stalled and is near session lows a little above $81........America
The bar to a Fed cut in September seems low, though as we noted, there are two more jobs and CPI reports (after today's) before then. In testimony this week, Fed Chair Powell indicated that while the recent data has been encouraging, more is needed to spur a cut. And more is coming. A 0.1% in the headline CPI today would see the annualized pace in Q2 fall to 1.6% after a 4.4% annualized pace in Q1 23 and a 2.0% pace in Q4 23. Similarly, a 0.2% rise in the core rate would translate into a 2.8% annualized rate in Q2 24 down from 4.8% in Q1 and a 3.2% annualized pace in Q4 23. At the same time, the labor market is cooling from albeit strong levels. The jobless claims have risen steadily in recent weeks, and the four-week moving average has risen from about 214k at the end of Q1 to 238k at the end of Q2. That is the highest since last August. Powell explained that the risks are more balanced now. The most negative combination for the dollar today is a soft CPI and higher weekly jobless claims....
