Stocks ended the holiday-shortened week with strong gains. The S&P 500, Nasdaq, and Nasdaq hit new highs on Friday, while the Dow Jones posted a solid weekly gain, though still about 1.5% below its May record high.
June’s job market report boosted stocks, suggesting a "Goldilocks economy." Over 200,000 positions were added, but signs of cooling emerged with the unemployment rate rising to 4.1%, the highest since November 2021, and wage growth slowing to a three-year low. May’s hiring numbers were also revised lower.
These signs of a weakening job market and easing wage pressures increased investor bets on a September rate cut. However, Wall Street analysts caution against overly optimistic bets, noting the job market remains tight. Recent data supports the Fed’s view of steadily declining inflation in a cooling economy.
This week, investors will watch the June CPI report on Thursday and Jerome Powell’s testimony before Congress on Tuesday for further insights into the Fed's economic assessment and policy outlook.
🇺🇸 Fed Chair Powell Testimony — July 9-10, at 17:00 GMT+3
This business week kicks off with a significant event: Fed Chair Powell's Testimony, taking place over two consecutive days. This is colloquially known as the Humphrey-Hawkins testimony. During this testimony, the Fed reports on its monetary policy and economic goals to Congress.
Powell will:
- Provide an overview of current economic conditions and update the Fed's outlook for the economy, focusing on assessments of inflation and employment.
- Discuss the Fed's current monetary policy stance, including interest rates.
- Take questions from members of Congress, covering a range of topics such as the performance of specific economic sectors, regulatory policies, and global economic issues.
We may receive signals regarding future rate cuts, which will inevitably impact the markets. Therefore, stay alert and pay attention to the outcomes.
🇬🇧 Manufacturing Production m/m — July 11, at 09:00 GMT+3
The next significant release will be the Manufacturing Production data from the UK for the previous month. Analysts forecast a decrease to 0.2%, down from the previous figure of 1.2%.
It is uncertain how this potential decline might impact assets such as the GBP/USD or the FTSE 100 index. However, historically in trading, there have been instances where weaker-than-expected manufacturing data have led to volatility in currency and equity markets. Traders should monitor the release closely, as unexpected results could lead to sharp movements in the GBP/USD pair and fluctuations in the FTSE 100 index.
🇬🇧 GDP m/m — July 11, at 09:00 GMT+3
The week continues with another crucial release for the British economy: the GDP data. Analysts are also expecting a decrease here, down to 0.0%. This means that the country's economy did not grow over the past month, which could also affect the British pound and related currency pairs and assets.
It is essential to monitor this release, as stagnation in economic growth can lead to volatility in the GBP and associated assets. Historically, flat or negative GDP growth has prompted reactions in the forex and equity markets, influencing trading strategies and investment decisions.
🇺🇸 CPI and Core CPI m/m — July 11, at 15:30 GMT+3
The next significant release to watch is the U.S. CPI and Core CPI m/m data. The monthly CPI is expected to come in slightly higher than the previous figure, at 0.1% compared to 0.0%. The Core CPI is anticipated to remain steady at 0.2%.
These releases can have a substantial impact on major indices such as the Nasdaq, SPX500, and Dow Jones, as well as the US Dollar. Higher-than-expected inflation data can influence the Federal Reserve's monetary policy decisions, potentially leading to increased market volatility.
Keep a close eye on this release, as it may drive significant movements in both the stock and forex markets.
🇺🇸 PPI and Core PPI m/m — July 12, at 15:30 GMT+3
The week concludes with the release of the U.S. PPI and Core PPI m/m data. Notably, the markets are anticipating an increase in PPI to 0.1%, up from the previous -0.2%.
This release is particularly significant because Producer Price Index (PPI) measures the average changes in selling prices received by domestic producers for their output. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation. An uptick in PPI can suggest increasing inflationary pressures, which might influence the Federal Reserve's decisions regarding interest rates.
The anticipated rise in PPI this month could therefore cause volatility in markets, especially in indices like the Nasdaq, SPX500, and Dow Jones, as well as the EUR/USD.
That's it for this week! 👋
