Daily Comments

The PBOC expressed inflation concerns based on China’s post pandemic consumption recovery, volatile energy prices, and “the swift turnaround of pork cycle”. Asian markets were higher. The Shanghai Composite jumped +1.60%. The Nikkei 225 was closed for a holiday.      European markets were mixed. The DAX Index slipped -0.05%. 10-year bunds yield 0.973%.      Initial Claims for the week of 08/06 edged up to 262K, just above 260K expected. This is however the highest print since November, and continuing claims are at 4-mo highs. July PPI fell -0.5% (ex-food and energy +0.2%) vs. expectations of +0.2%, another boost for the inflation doves. PPI YoY is up +9.8%, with core YoY printing at +7.6%. 10-year Notes yield 2.891%. The September US$ Index faded -0.04% to 105.040. September Crude Oil surged +2.6% to $94.34. December Gold dribbled -0.4% lower to $1,807.20. After today’s PPI report stocks ran upwards to a 3-month high. The knee-jerk reaction presumes that the Fed will no longer be as hawkish, which would be beneficial to equity markets. The early morning rally however soon turned on a dime, with the NQ selling off hard. Major indices all fell from highs, with the NQ ending firmly negative.

China’s July consumer prices rose +2.7% and producer prices rose +4.2%, both below expectations. Asian markets were mixed. The Nikkei 225 fell another -0.65% but the Shanghai Composite lost -0.54%.      European markets were strong. The DAX Index jumped + 1.23%. 10-year bunds yield 0.896%.      For the week of 08/06, the MBA Mortgage Applications Index was up +0.2% (purchases fell but refinancings rose) and EIA Crude Inventories were 5.5M bbls. Preliminary June Wholesale Inventories registered 1.8% vs. 1.9% consensus. July CPI shocked markets, coming in unchanged MoM vs. +0.2% expected (core ex-food and energy +0.3% vs. +0.5% consensus). The YoY figure printed at +8.5%, below expectations of +8.7% (core ex-food and energy +5.9% vs. +6.1% consensus). The Treasury Statement printed $-211.1B vs. $-162.0B consensus. 10-year Notes yield 2.792%. The September US$ Index sank -1.07% to 105.110. September Crude Oil rallied +1.6% to $91.93. December Gold gained +0.1% to $1,813.70. Ahead of the open the CPI data was released, and stock markets soared immediately after. Stocks remained firm, ending on session highs.

The tech focused SoftBank Vision Fund reported a $-21.68B loss for the second quarter. With little in the way of data, Asian markets were mixed. The Nikkei 225 fell back -0.88% but the Shanghai Composite added +0.32%.      European markets were weaker across the board. The DAX Index fell by -1.12%. 10-year bunds yield 0.923%.      Preliminary Q2 Nonfarm Productivity fell -4.6%, weaker than the -4.5% expected. In the last year productivity has fallen at a record -2.5% rate. Unit Labor Costs jumped +10.8%, beyond the expected +9.3% gain, and the highest jump since 1982. The July NFIB Small Business Optimism Index improved slightly to 89.9 vs. expectations of 89.2. 10-year Notes yield 2.787%. The September US$ Index dipped -0.11% to 106.205. September Crude Oil slid -0.3% to $90.50. December Gold added +0.4% to $1,1812.30. In the overnight, the ES was marginally lower. As the day began, prices of all stock indices began to fall further. Then, during the remainder of the day, there was choppy back and forth consolidation, with multiple attempts to get back into the black. By the close however, the bears held their ground, with indices closing lower.