US inflation rises at a more moderate pace!
Like China, which on Monday we had its inflation data and was rising much slower than expected, today's US inflation data also raised at a more moderate pace.
According to the published data, US consumer inflation raised 0.5% from June and 5.4% from a year ago; the core (Excluding the food and energy) consumer price index also rose 0.3% monthly in July and 4.3% compared with the year ago. An overview of economic data tells us that the FED outlook was closer to reality in the market and that we should not price too much on inflation fears.
However, it is not the end of the story, and we have to wait for more data to come out. We still have many other factors that, in the mid-term, can affect inflation once more, like materials shortages, shipping bottlenecks, and hiring difficulties. All mentioned factors can be a good reason to have the prices higher-level than current, in coming months. Increasing the costs in mid-term can put more pressure on economic growth and decline in the stock markets.
Today and after published data, while market participants got a little relieved of the fear of inflation, S&P 500 started its rally again to print new record highs. Currently, with a 0.2% increase in S&P trading at 4,445 and from the fundamental point of view till tomorrow that we will have the PPI (Producer Price Index), the market would be a bit more cautious.
From the technical point of view, after few days of increasing, the OBV trend line is flattening, but it is trading above both 20 and 50 EMA lines, sending mixed signals. For now, we can focus on 4,430, as strong support for higher numbers, while breaching under this level will put the following supports at 4.424 and 4,415 in the spotlight.
