US Stock Weekly Update 8 - 12 Aug 2022

U.S. stocks rose strongly last week. The S&P rose 3.2% for the week, while the Nasdaq and Dow gained 3%. Better than the July CPI was significantly better than expected, market confidence was greatly boosted, and major industry sectors generally rose. The yield on the 10-year U.S. Treasury bond closed flat at 2.84%, with a spread of -38 basis points from the yield on the two-year Treasury bond, maintaining a deep inversion. The VIX, the fear gauge, fell 7.7% for the week. Oil futures stopped falling and rebounded, with WTI crude oil closing up 3.8% this week at 91.85. Spot gold closed up 0.7% at $1,802.03 an ounce. The U.S. dollar index retreated and closed down 0.82% at 105.86.

The annual rate of the US CPI in July was 8.5%, the market expected 8.7%, and the previous value was 9.1%. The annual rate of core CPI was 5.9%, expected 6.10%, and the previous value was 5.90%. After the report was released, the US dollar index fell, and US stocks rose strongly. Institutional analysis said that the CPI data in July was lower than expected, which stimulated the sharp rise in U.S. Treasury bonds and led to a sharp sell-off in the Fed's futures swap contracts. Current price action reflects a higher than 75-basis-point chance of a 50-basis-point rate hike at the September meeting, and less than 100-basis-point rate hikes at the Fed's next two meetings combined.

The University of Michigan's Consumer Confidence Index recorded a reading of 55.1 in August, significantly exceeding expectations of 52.5. Analysing spending by the survey director, all components of the expectations index improved, especially for low- and middle-income consumers who are particularly sensitive to inflation. The economic outlook for the year ahead rose sharply, slightly above the average for the second quarter of 2022, while the other two expected index components were flat or below the average for the second quarter.

The median U.S. long-term inflation forecast is 3%, with less uncertainty. As energy prices continue to fall, median inflation is expected to fall to 5 percent this year, the lowest level since February but still higher than the 4.6 percent a year earlier.

Economic Releases For The Week (15/8/2022-19/8/2022):

​15/8/2022
​JP - Japan's 2Q22 GDP Growth Rate (Preliminary), 7.50AM
​CN - China's Retail Sales, 10.00AM
​CN - China's Industrial Production, 10.00AM
​CN - China's Unemployment Rate, 10.00AM

​16/8/2022
​UK - United Kingdom's Unemployment Rate, 2.00PM
​EU - Eurozone's ZEW Economic Sentiment, 5.00PM
​US - United States' Industrial Production, 9.15PM
​US - United States' Manufacturing Production, 9.15PM

​17/8/2022
​JP - Japan's Machinery Orders, 7.50AM
​UK - United Kingdom's Inflation Rate, 2.00PM
​EU - Eurozone's 2Q22 GDP Growth Rate (2nd Est), 5.00PM
​US - United States' Retail Sales, 8.30PM

​18/8/2022
​US - United States' FOMC Minutes, 2.00AM
​EU - Eurozone's Inflation Rate, 5.00PM
​US - United States' Existing Home Sales, 10.00PM

​19/8/2022
​JP - Japan's Inflation Rate, 7.30AM
​UK - United Kingdom's Retail Sales, 2.00PM

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Sources from: Investing.com; Reuters.com

Louis Yap

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