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Investing.com – US stocks rose after data showed that annual inflation in the United States accelerated less than expected in July.
At exactly 22:40 Riyadh time, minutes before closing, it rose by 0.1%, while Bit rose by 0.12% and Nasdaq by 0.08%.
The indices lagged behind their major gains in the beginning of trading due to the strong movement in the bond market after the 30-year bond auction, which raised bond yields strongly and helped to get rid of its losses and turn for a strong rise to 102.465 against a basket of foreign currencies.
The secret of transformation and the rise of the dollar
The biggest potential reason for the decline in the markets and the rise in the dollar is the rise in long-term interest rates on the back of a lackluster bond auction.
DataTrek Research co-founder Nicholas Colas blamed a spike in the 10-year yield.
“I think there is a lot of concern that long interest rates will reach new highs,” Colas wrote. He continued, “The US economy remains strong enough to create inflation and demand in the labor market.” It fuels wage gains and more inflation, Colas noted.
“Real rates are also positive and will keep QT monetary tightening there for some time,” he added.
Peter Boockvar, chief investment officer at Blaakley Financial Group, noted that bond yields were rising after a particularly weak 30-year bond auction.
The reaction was somewhat delayed in that for about 20 minutes after the results, the long end of the yield curve didn’t do much, but over the last 25 minutes yields have fallen back to today’s highs with the 10-year yield now at 4.07% after falling from 4% after the auction.
Inflation is rising slowing
Annual inflation in the US accelerated less-than-expected in July, with the core consumer price index holding steady at 0.2% on a monthly basis, according to estimates. On a yearly basis, inflation rose 3.2%, up from 3.0% in June. Economists had expected the figure to jump 3.3%.
Meanwhile, the core CPI, which excludes volatile items such as food and energy, was unchanged at 0.2% MoM. On a yearly basis, the core figure increased by 4.7%, which was a slower rate than the expected value of 4.8%.
While these figures indicate that inflation remains flat, they also point to the possibility of easing price pressures and perhaps reinforce the Fed’s stance to halt the cycle of long-term interest rate increases.
The Fed meets next in September, and officials have said in recent days that they may be getting close to a point where they can pause on rate hikes.
Positive results for Disney boost morale
This added to the optimism generated by the strong numbers of entertainment giant Walt Disney.
Walt Disney (NYSE: ) stock rose 1%, boosting sentiment in the broader market, after it announced entertainment giant announced plans to increase the prices of its streaming service and crack down on password sharing to help offset shaky performance in its film and TV divisions.
The streaming unit, which includes options such as Disney+ and Hulu, trimmed losses by more than expected in the fiscal third quarter after higher subscription prices and lower marketing costs.
Reuters reports, citing three sources, that Disney has also set up a working group to study artificial intelligence and how it can be applied across all of the group’s entertainment services.
The tech sector is likely to be in focus after US President Joe Biden unveiled a ban on some investments in Chinese technology companies, opening the door for retaliatory measures.
Declines after CPI data
Oil prices fell on Thursday amid profit-taking, but remained near multi-month highs ahead of the release of US headline inflation data.
Data released by the Energy Information Administration on Wednesday showed that US crude inventories grew unexpectedly in the week of August 4th. However, there was also a much bigger-than-expected drawdown in gasoline and distillate inventories, indicating that US demand for the fuel remains strong.
Oil prices have soared in recent days after production cuts were extended by Saudi Arabia and Russia, exacerbating supply scarcity.
2023-08-10 19:46:00
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