AMERICAS Waiting on CPI, China and Alaska
By Mike Dolan, opens new tab, Editor-At-Large, Finance and Markets
Buoyant stock markets and an event-free Monday are allowing investors to prep for the three big events of the week: Tuesday's U.S. consumer inflation report, the China trade deadline and Friday's U.S.-Russia summit in Alaska.
Doubts about the strength of the jobs market and revolving doors on the Federal Reserve board have traders betting on a Fed rate cut next month. Tuesday's consumer price report for July is one of the few data sets that could alter that thinking as the potential price impact of tariffs is examined.
The embattled Bureau of Labor Statistics will publish the numbers, and the consensus forecast is for annual headline and core CPI gains to tick up a tenth each to 2.8% and 3.0%, respectively, both well above the Fed's 2% target and heading in the wrong direction.
* Wall Street futures and Treasuries were both firmer ahead of the big inflation number, with bond market volatility gauges at their lowest in three years (.MOVE), opens new tab and last week's S&P 500 gains bringing the index back within 1% of all-time highs. The dollar was largely flat.
* Last week's U.S. tariff day passed without causing major market moves, but Tuesday brings a separate deadline on U.S.-China trade as President Donald Trump decides whether to extend the existing truce or let tariffs shoot back up to triple-digit figures. Trump on Sunday urged China to quadruple its soybean purchases, sending Chicago soybean prices higher, and - in a highly unusual move - Nvidia and AMD reportedly agreed to give the U.S. government 15% of their revenue from sales to China of advanced AI chips such as Nvidia's H20. Chinese stocks were a touch higher ahead of the deadline.
* Bitcoin surged 4% to a high of $122,308 on Monday, back within sight of the July 14 record of $123,153, in what appeared like a delayed reaction to Trump's executive order last week enabling crypto holdings to be held in U.S. retirement accounts.
* Finally, Friday's Alaska summit will be watched closely by European markets monitoring possible breakthroughs on ending the Ukraine war.
For today's deep dive, I'll discuss why whatever happens at September's Fed meeting matters less than concerns about a potential rethink of the Fed's entire structure.
Today's Market Minute
* Nvidia and AMD have agreed to give the U.S. government 15% of revenue from sales to China of advanced computer chips like Nvidia's H20 that are used for artificial intelligence applications, a U.S. official told Reuters on Sunday.
* From McDonald's and Coca-Cola to Amazon and Apple, U.S.-based multinationals are facing calls for a boycott in India as business executives and Prime Minister Narendra Modi's supporters stoke anti-American sentiment to protest against U.S. tariffs.
* Investors are backing out of or taking active bets against high-priced corporate credit, where they anticipate a correction in response to signs of slowing economic growth that could eventually impact stocks.
* The crude oil market's sanguine reaction to the U.S. threats to India over its continued purchases of Russian oil is effectively a bet that very little will actually happen, writes ROI columnist Clyde Russell.
* Inadvertent fumbles in the presentation of financial data have become endemic across the media space, which can confuse readers at a time when statistical literacy is more important than ever. Income Securities Advisor, opens new tab publisher Marty Fridson explains why having a basic grasp of statistics and finance is especially crucial today.
Chart of the day
China's producer prices fell more than expected in July, while consumer prices were flat, underscoring the impact of sluggish domestic demand and persistent trade uncertainty on consumer and business sentiment.
Deflationary pressures have prompted Chinese authorities to address overcapacity in key industries. However, the latest round of industrial restructuring appears to be a pared-down version of the sweeping supply-side reforms launched a decade ago that were pivotal in ending a deflationary spiral.
Today's events to watch
* Mexico June industry output (8:00 AM EDT)
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
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