Markets Bracing for Volatility after US Inflation Numbers
10 August 2022
Sentiment worsened notably on Tuesday and Wednesday as equity indices failed to stay above/breach critical resistance, with the recent rally running out of steam.
Meanwhile, the UK government is preparing for organized electricity outages for businesses and homes this winter as a worst-case scenario due to the energy crisis plaguing Europe. GBPUSD fell toward 1.20 amid the news.
In other news, US yields ticked higher yesterday, with the 10-year yield trying to break from the recent consolidation pattern, while the 2-year yield has already done that.
James Bullard, the president of the St. Louis Federal Reserve, stated on Tuesday that he would like to see interest rates go to 4% by the end of the year and added that the Fed is ready to maintain rates "higher for longer" should inflation continue to surprise to the upside.
Inflation numbers across the world
Inflation in the US is anticipated to have decreased somewhat from June's 9.1% reading to 8.7% for July later today. However, the core inflation will likely jump further from 5.9% to 6.1%.
Data released earlier on Wednesday revealed that China's consumer and producer pricing indices rose more slowly than anticipated in July, indicating that the nation was still struggling with the detrimental COVID-19 lockdowns. The yearly CPI printed 2.7%, up from 2.5%, but below the 2.9% expected. At the same time, the PPI index actually slowed from 6.1% to 4.2%, against projections of 8%.
Additionally, the German CPI increased 0.9% month over month in July while only slightly declining to 7.5% year over year, indicating that rising prices remained intense in the biggest economy in Europe.