The Fed is starting to win its fight against rising prices. Disappointing economic statistics in China.
The markets were carried by the drop in inflation in the United States suggesting that the end of the monetary tightening on the part of the American Federal Reserve is very close, despite the first results of companies which are puzzling.
In this context, bond yields fell. The American 10-year fell back below 4% to 3.82% and the German 10-year to 2.50%.
In the United States, consumer and producer prices pointed to easing inflation, raising hopes that the Fed is beginning to win its fight against inflation and that one additional rate hike rather than two will take place by the end of the year. Thus, the consumer price index rose slightly by +0.2% in June, after +0.1% in May. Year-on-year, the CPI rose 3.0%, the lowest year-on-year increase since March 2021, after 4% last month and 3.1% expected.
Core inflation (excluding food and energy) stood at +0.2%, after increasing by +0.4% in May. Over one year, it increased by 4.8%, against 5.3% a month earlier.
Producer prices for June came out at +0.1% in raw data and +2.6% excluding food, energy and commercial services, after annual rates of 0.9% and 2.8% respectively observed in May.
In Europe, inflation in Germany and France came out stable compared to the previous month, in line with expectations. The harmonized CPI index is respectively 6.8% and 5.3% over 1 year. Inflation data for the zone will be released on Wednesday and will not change expectations for the European Central Bank’s next move higher on these key rates.
In China, the economic statistics are disappointing. Although growth continued in the second quarter, it came out below expectations at 6.3% against 7.3% expected. In addition, retail sales, the main indicator of household consumption, fell once again in June to +3.1%, after +12.7% in May. The economy of the Middle Empire is running out of steam, and unemployment among young people, which peaks at 21.3%, worries. Despite these data, industrial production picked up and stood at +4.4% above the consensus. Investors argue for more stimulus from the Chinese government that is slow to materialize.
In this context, the indices ended the week on a positive note. The S&P 500 index took +2.42%, the Nasdaq technology index +3.32% and the Stoxx 600 Europe, +2.94%.
This week, investors will focus on corporate earnings, in the United States where financials got the ball rolling on Friday, and in Europe.
The essentials in a nutshell
2023-07-17 14:32:20
#Decline #inflation #United #States #Bonhôte #stock #market #flash
