- RBNZ tipped to cut cash rate to 3% as inflation cools and jobless rate hits 4-year high
- US stocks close little changed but the S&P does close at a new record
- US Treasury Secretary Scott Bessant says exploring options to acquire additional Bitcoin
- Trump administration to discuss US taking stake in Intel
- Fed candidate Zervos: Fed is overdue for a rate cut
- Crude oil futures settle at $63.96
- Fed’s Barkin: Business sentiment has picked up in some ways but not hiring
- Trump News: Inflation is down to a perfect number
- 30 year fixed-rate mortgage falls to 6.58% for the August 14 week versus 6.63% last week
- Trump TODAY: Wants to get a deal done and thinks “we will make a deal”
- Fed Pres. Musalem; Inflation is running about 3% above the 2% target.Tariffs are impacting
- Pantheon Macroeconomics sees MoM core PCE at 0.26% & the YoY increasing to 2.9% from 2.8%.
- US PPI for July 3.3% YoY vs 2.5% estimate. MoM 0.9% vs 0.2% estimate
- US initial jobless claims 224K vs 228K expected
- US Treasury Sec. Bessent: Does not know if Putin will agree to ceasefire.
- US Bessent on crypto reserve: we are not going to be buying it
- The USD is mixed vs. the 3 major currency pairs ahead of the US PPI and claims data.
- investingLive European markets wrap: A mixed mood awaiting more US data later
The US PPI data came in much stronger than expectations at 0.9% for the month of July versus 0.2% expected. The core measure was also at 0.9% (versus 0.2% expected). For the year-on-year figures, headline PPI rose by 3.3% versus 2.5% expected and the ex food and energy increased by 3.7% versus 2.9% expected.
Nuances of the numbers showed that warehousing and transportation were big contributors which had some people scratching their heads, as warehousing is done with fewer people and more so with robotics. Nevertheless, coming off of the big revisions in the employment numbers, there is a logical fear that all data is not accurate.
As a result, the earlier declines in the stock market were clawed back. At the end of the session, the major indices were virtually unchanged (+ or – by 0.03%).
US yields was not as forgiving as yields moved higher across the yield curve. The market went from a 100% expectations for a 25 basis point cut in September to a 94% expectations. Prior to the release, there was also a 6% chance of a 50 basis point cut. That was taken away and replaced by a 6% chance of no change in policy in September.
Looking at the yield curve:
- 2-year yield 3.734%, +4.7 basis points
- 5-year yield 3.817%, +4.5 basis points
- 10-year yield 4.286%, +4.7 basis points
- 30-year yield 4.875%, +4.6 basis points.
Looking at the US dollar, the greenback rose with the biggest gains versus the AUD ( +0.73%) and the NZD (+0.97%). The dollars gains vs the other currencies showed:
- EUR +0.49%
- JPY +0.25%
- GBP +0.35%
- CHF +0.27%
- CAD +0.39%.
St. Louis Fed Pres. Musalem noted that inflation is about 1% above target and the labor market remains near full employment, though signs of weakening are emerging, including slower payroll growth and lower labor demand. Tariff impacts on inflation may fade within 6–9 months but could persist, while services inflation is unusually high. They take a meeting-by-meeting, forward-looking approach, seeing risks of slower growth but little evidence of layoffs from businesses they speak with. While more data is needed before deciding on policy, they view a 50 bp rate cut as unsupported by current economic conditions.
Later in the day, Fed President Barkin said business sentiment has improved in some areas but hiring remains subdued, with firms generally not planning layoffs. Consumer data for July looks stronger, though manufacturers are struggling with tariff-related supply chain issues. Many consumers are trading down, which could make businesses cautious about passing along higher costs. The unemployment rate has stayed stable as slower job gains are offset by slower labor force growth, and companies may have little room to cut staff, potentially turning to AI for cost savings instead. Slower labor force growth has yet to generate upward wage pressure.
Tomorrow Pres. Trump meets with Pres. Putin in Alaska. Hopes are for a second meeting which would include Ukraine Pres. Zelenskiy.
- Crude oil futures closed higher (currently up $1.21 at $63.95.
- Gold fell $-21.52 or -0.63%.
- Bitcoin tumbled $5400 or -4.4% to $117,932. Later today US Treasury Secretary percent said exploring options to acquire additional bitcoin.
This article was written by Greg Michalowski at investinglive.com.