Markets Steady Ahead of a Significant Week – S&P Up 0.5%
U.S. stock markets recovered more ground on Friday, closing the week nearly flat after last Monday’s significant sell-off. The Dow edged higher by 0.13%, while the S&P 500 and Nasdaq gained more traction, finishing the day up 0.47% and 0.51%, respectively. U.S. Treasury yields had a mixed performance, with the 2-year yield rising by 1.1 basis points to 4.055%, while the 10-year yield fell by 5.3 basis points to 3.944%, once again dipping below the 4% level. Oil prices continued their upward trend, driven by positive U.S. data and ongoing concerns in the Middle East. Brent crude rose 0.6% to $79.66, and WTI increased 0.9% to $76.84 per barrel. Meanwhile, gold remained in a tight range, closing flat at $2,427 at the end of the New York session.
U.S. Inflation Data in Focus This Week
Last week was relatively quiet in terms of macroeconomic data releases, but that didn’t stop markets from being active. This week, however, has a busier schedule, which could lead to increased market volatility. The U.K. is set to release a series of key tier 1 data, which should influence the pound and overall sterling markets. However, the most significant event with the potential to impact the broader market is the U.S. CPI data release on Wednesday. Currently, the market is pricing a 50% chance of a 50-basis point rate cut from the Fed in September, with a 25-basis point cut having a 46% probability. With the next Fed meeting now being highly anticipated, any deviation from expectations in the key inflation data could have significant implications.
A Quiet Start to a Busy Week – Probably!
It’s a bold headline given the recent volatility and the market movements seen last Monday, but the macroeconomic calendar suggests a quieter day today. We did see some market consolidation on Friday, so this outlook might not be entirely unjustified. Yen traders will likely be on edge during the Asian session—if that’s even possible—due to Japanese markets being on holiday, leading to thinner trading conditions. Chinese New Loans data will be released during the Asian session, which could trigger some movement in local markets. The other two sessions of the day are relatively quiet in terms of significant data releases, but traders will remain vigilant for any news that could reignite market activity.
