• Wall Street finished higher on August 14, with the DJIA, S&P 500, and Nasdaq rose by +0.61%, +0.38%, and +0.03% respectively.
• US Stocks gained support on Wednesday following a weaker-than-expected US July CPI report, bolstering expectations for a Fed rate cut next month. Markets are now pricing in a 63% chance of a 25 bps rate cut at the September 17-18 FOMC meeting, with a 37% probability for a 50 bp cut, per CME’s FedWatch.
• The 10-yr UST yield slipped by -2.0 bps to 3.83%, while the 2-yr yield rose by +1.0 bps to 3.94. T-notes were supported by the CPI report, with the 10-yr breakeven inflation rate falling to a one-week low of 2.058%, signaling easing inflation expectations.
• The US Consumer Price Index (CPI) inflation eased to +2.9% YoY in July 2024 (vs consensus +3.0% YoY), falling below +3.0% YoY for the first time since March 2021, down from +3% YoY in June. Annual core inflation also eased to +3.2% in July 2024, the lowest since April 2021, down from +3.3% YoY in June and matching expectations.
• Meanwhile, in Europe, the UK’s annual inflation rate inched up to +2.2% YoY in July 2024, surpassing June’s +2.0% YoY but falling short of the +2.3% YoY forecast. Core inflation moderated to +3.3% (vs consensus +3.4% YoY) down from +3.5% in June.
• In Asia, Japan's economy expanded by +3.1% QoQ in 2Q24, surpassing the +2.1% forecast and rebounding from a -2.3% contraction in Q1, suggesting the beginning of a favorable cycle of increased incomes and spending.
• Global bond yields moved lower on Wednesday: the 10-yr German bund yield fell by -0.6 bps to 2.18%, the 10-yr UK gilt yield dipped by -6.3 bps to 3.83%, and the 10-yr Japanese JGB yield fell by -2.50 bps to 0.82%.
