Market Commentary: Thursday 15th August

A good night for equities, despite China’s economy failing to expand and unemployment rising for the first time since February. The numbers also showed that industrial output rose 5.1% in July from a year ago, the urban jobless rate reached 5.2%, and retail sales climbed 2.7%, which was slightly better than forecast. The CSI is +0.6%.

Back to yesterday's CPI data, the figures showed that year-on-year core consumer prices in July rose at the slowest pace since 2021, paving the way for anticipated Federal Reserve interest rate cuts next month. But the real debate is about the size of the cut. The important part to remember is that the Fed only has eight meetings a year, which means there are only three meetings left this year. These meetings are on 18th September, 7th November, and 18th December. Presently, the market has 35bps priced in for September, 67bps for November, and 100bps for December. Time for you to do the math. Is it going to be 50-->25-->25, 25-->50-->25, or 25-->25-->50? It could be none of these combinations—only time will tell.

Just out are the UK GDP figures, which grew 0.6% QoQ, in line with expectations. Later today, we have US initial jobless claims, retail sales, and industrial production.

In other markets, Bitcoin fell 1.2% to $58,434.84, Ether fell 1.2% to $2,644.59, the yield on 10-year Treasuries was little changed at 3.83%, Japan’s 10-year yield advanced two basis points to 0.835%, West Texas Intermediate crude rose 0.1% to $77.08 a barrel, and spot gold rose 0.2% to $2,452.88 an ounce. EUR/USD opens above 1.10, GBP/USD at 1.2850, and USD/JPY at 147.20.

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