Equities barely move after key economic report fails to surprise - Market Overview

By: Miguel A. Rodriguez

14:42, 12 August 2021

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Both European and U.S. equities started the trading day flat after yesterday's rises, which saw the S&P 500 hit new all-time records.

The U.S. CPI was in line with expectations, suggesting the growth in price levels could tone down from now on. However, the inflation figures revealed yesterday in Europe saw sharp rises to the highest level since 2008.

The debate on whether inflation is here to stay or not could continue in the coming months, although Fed will probably maintain its current position. Still, the U.S. Central Bank could start reducing bond-buying during the third quarter of this year, according to official voices. However, this decision would be more linked to the employment data, which experienced a notable improvement. Should it carry on improving at such a high rate, it could accelerate the Fed's decision to reduce its ultra-accommodative monetary policy gradually.

The U.S. Treasury Bond Yields fell yesterday after the CPI report came out, but they started gaining ground again today, with the 10-year bond Tnote hitting 1.34%.

On the Forex front, USD/JPY stopped its upward path and could not overcome the resistance level located around 110.70. Above this last bearish leg, the pair would most likely work its way towards levels higher than 111.00.

Today the figure for producer price index is scheduled for publishing, from which investors expect new clues regarding the evolution of prices.

Elsewhere, Oil rebounded from the support level located at 67.22, through which the 100-day SMA line passes. The United States revealed that it was in contact with the OPEC + countries to adjust their production levels and avoid an upward scale like the one we have witnessed in recent months negatively affecting the global economic recovery process.

The key point is in the evolution of demand at a global level - a factor of uncertainty due to the pandemic’s unpredictability. In this regard, the monthly IEA report is published today and could provide the market with forecasts in this sector, potentially impacting crude oil prices.

Sources: Bloomberg, reuters.com.

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