Volatility on European markets on the day of the publication of US inflation in July, the highlight of the week given that the expected slowdown represents a key step to chart the path of the Fed in terms of rates in the coming months. Uncertainty dominates the European lists which show modest gains: the Ftse 100 index and the Dax are up slightly by 0.13% and 0.2% respectively, while the Cac40 in Paris marks + 0.2%. Piazza Affari is on the same wavelength, with the Ftse Mib index which is the best in the Old Continent and shows growth of almost half a percentage point to 22,586.26 points. The BTP-Bund spread also falls, moving in the 208 basis points area.
Waiting for US inflation
In a market where there is a summer climate, the data on US inflation is expected which, according to the Bloomberg consensus, should fall to 8.7% from 9.1%, although there may be a risk of a minor slowdown. than expected given the CPI “Nowcast” of the Cleveland Fed which estimates 8.8%. However, the prevailing forecast at the moment is that the rise in consumer prices, which forced the Federal Reserve to tighten monetary policies since the beginning of the year, has peaked and started to decline. “A confirmation of this scenario does not mean that the Fed will suddenly turn into a more accommodative stance, as inflation will remain well above the ideal level. This means that the impact on the dollar will be minimal, with an alignment between market expectations and the likely path of the central bank’s dot plot, ”said Ricardo Evangelista, senior analyst at ActivTrades, adding that on the other hand, a surprisingly high inflation number could lead investors to discount an even more aggressive Fed, in a dynamic that would further strengthen the US dollar.
“The current problem is that, despite the slowdown in the general figure, the core one is instead expected to accelerate to 6.1% from 5.9% after three months of downsizing”, point out from Mps Capital Servicesrecalling that this evening, following the publication of inflation, two non-voting Fed members (Evans and Kashari) will speak, whose opinion will still be important in evaluating the first considerations on monetary policy in the light of the new information available.
Inflation bulletin in China, Germany and Italy
Meanwhile, Chinese inflation, while rising to a maximum for two years, was lower than expected (2.7% compared to 2.9% by consensus). Unlike Western countries, inflation has remained fairly under control thanks also to the tight containment measures of the virus in force and the sporadic outbreaks that have slowed down consumption and investments. Overall, the strategists still explain, tonight’s price data does not seem to hinder China’s continued accommodative monetary and fiscal policy in the near future.
Updates on consumer prices from Germany and Italy also arrived today, with preliminary estimates confirmed in both cases. According to data released by Istai, in July the national consumer price index for the entire community (NIC), gross of tobacco, recorded an increase of 0.4% on a monthly basis and 7.9% on an annual basis (from + 8% in the previous month), confirming the preliminary estimate. The acceleration in the price growth of the so-called “shopping cart” should be noted, which reaches + 9.1%, registering an increase that has not been observed since September 1984.