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Weekly Market Preview
Friday, August 11, 2023
Last week, the US headline CPI YoY of July came in lower than expected (3.2% vs 3.3%) while the monthly CPI stabilized at 0.2% marking the smallest increase in two and a half years. These figures have influenced market sentiment, pointing towards the anticipation that the Federal Reserve might keep interest rates unchanged in the forthcoming September meeting. However, the ultimate decision hinges on the jobs and inflation reports scheduled for release in August.
In the current week, markets are eagerly awaiting inflation data from several major economies. These figures will play a key role in shaping market expectations concerning the upcoming monetary policy decisions form central banks such as the ECB and the Bank of Canada. However, expectations are still high that the Bank of England’s might hike interest rates in the next meeting anyway on the back the relatively high inflation levels which remain significantly distant from their 2% target.
Additionally, the markets will closely watch the FOMC minutes for the Fed meeting of July to get further insights into the committee members views regarding the performance of the US economy and inflation levels. Investors hope to get a better understanding about the committee’s stance on handling inflation. Specifically, if most members lean towards maintaining current interest rates for longer, or if they may take a more aggressive approach via hiking rates now and cut them later.
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