Weekly Outlook, 9 - 13 August

Weekly Outlook, 9 - 13 August
Market Outlook
Ahura Chalki
Author:
Ahura Chalki
Published on: 08.08.2021 16:07 (UTC)
Post reading time: 2.41 min
253

The light week with CPI numbers! 


A week after NFP usually is a very light week, with not much data. The week ahead also is the same, light and mostly about inflation numbers. At the same time, we should not forget that still, we have some concerns about the Covid situation all over the globe. However, investors still are optimistic about economic recovery by almost 90% success rate between the S&P 500 listed companies in the earnings reports. 

Let's go and see what is waiting for us in the week ahead. 


Chinese Inflation - Monday 

Chinese economic recovery seems to be okay; however, it is a bit less than expected. The People's Bank of China recently decreased reserve requirements, backing the domestic economy to grow better. With the latest supports and improvements in Manufacturing, industrial and export numbers, we expect to see inflation increase in July, especially after a 0.4% contraction in June. Spreading virus cases in more than 30 cities increased a bit the risk level; however, it's not severe yet. After stable trading against the USD, the Chinese Yuan is weakening a bit, and it is expected to hold the current trend for this week. 



US inflation - Wednesday & Thursday

With printing the highest level since 1991, US inflation in June raised to 5.4%, and the core price index also grew to 4.5%, driven mainly by used car prices. The producer Price index also saw a significant increase in June. This week on Wednesday and Thursday, we will have both consumer and producer inflation numbers, respectively. After last week's great numbers in the labor market, if inflation continues and increases, we have to wait for more pressure on Fed officials to announce tapering bond purchases even in September! Higher inflation, especially after such substantial NFP numbers, will cause a free-fall in Nasdaq and vice versa!