Yesterday, the US CPI was a good number, coming in below expectations. Today, the PPI data was the exact opposite. Not only were the headline numbers for the month higher, but the previous months were also revised higher.
The US dollar and yields initially rose after the report, but memories of the central bank chief’s comments this week where he talked about low inflation and how it’s not just about inflation but also the employment picture, along with the CPI data, sent yields and the dollar to the downside.
Later at 10 a.m., Michigan consumer confidence remained near low levels (and below expectations) after a sharp and unexpected decline last month.
All of this helped push the US dollar lower against all major currencies today. At the end of the day, the US dollar was unchanged against the Canadian dollar, but was down -0.21% against the Swiss franc, and was down -0.38% to -0.60% against the other major indices (the US dollar was down -0.60% against both the British pound and the Japanese yen).
During the trading week, the US dollar ended the week mostly lower with only a slight gain against the New Zealand dollar. The changes in the US dollar during the week against the major currencies showed the following:
- Euro, -0.61%
- British pound, -1.35%
- Japanese Yen, -1.78%
- Swiss Franc -0.08%
- Canadian Dollar, -0.035%
- Australian Dollar, -0.53%
- New Zealand Dollar +0.43%
Looking at the US debt market today, yields have fallen with the 2-year note posting the biggest decline. Yield spreads continue to narrow on a negative yield curve today:
- The yield on the two-year note was 4.457%, down 4.9 basis points. For the week, the yield fell 15.4 basis points.
- The yield on the 5-year Treasury note was 4.107%, down 1.6 basis points. For the week, the yield fell 12.3 basis points.
- The yield on the 10-year Treasury note was 4.186%, down 0.6 basis points. For the week, the yield fell 9.5 basis points.
- 30-year yield 4.398%, -0.5bp. Over the week, yield decreased by -8.1bp.
Consider the differences:
- The spread between 2-10-year yields fell to -27.1 basis points, the smallest negative close since January. Over the week, the spread rose by 5.7 basis points.
- The spread between the yield on 2-30-year bonds, -5.9 basis points, is the smallest negative close since late January. The spread has widened by 7 basis points this week.
In addition to the decline in the CPI, yields benefited from favorable auctions of 3- and 10-year bonds (which were welcomed by strong domestic demand). The 30-year bond story was different, but 2 out of 3 bonds outperformed the toughest 30-year auction.
In other markets:
- Crude oil fell this week by -1.14% to $82.21.
- Gold rose $19.54, or 0.82%, to $2,410.78.
- Silver fell by $0.47 or -1.38% to $30.77
- Bitcoin price rose by $1,778 to reach $57,617
next week,
Monday:
- Imperial Manufacturing
- Fed Chair Powell at 12 noon ET
Tuesday
- Consumer Price Index Canada
- US Retail Sales
- NZD CPI at 6:45pm ET
Wednesday:
- UK Consumer Price Index
- Australian employment data at 9:30pm ET
Thursday:
- Employment in the United Kingdom
- ECB Interest Rate Decision (No Change Expected)
- US Weekly Unemployment Claims
- Federal Manufacturing in Philadelphia
Friday
- UK Retail Sales
- Retail sales in Canada.
This week’s key earnings releases include:
Monday, July 15
- Goldman Sachs, BlackRock,
Tuesday, July 16
- Bank of America, UnitedHealth Group, Progressive, Morgan Stanley, Charles Schwab, PNC, Interactive Brokers, J.P. Hunt,
Wednesday, July 17
- Johnson & Johnson, United, Alcoa, Discover, Kinder Morgan
Thursday, July 18
- Taiwan Semi Conductor, Nokia, DR Horton, Netflix, Intuitive Surgical, PPG
Friday, July 19
- American Express, Halliburton, Comerica, Travelers
When will Magnificent 7 release its earnings for this cycle?
- Alphabet July 23
- Microsoft July 23
- Tesla July 23
- Amazon July 25
- Meta Platforms, July 31
- Apple August 1
- NVIDIA, August 15