Marcus Today Pre-Market Podcast – Friday 11th August

US equity markets finished slightly higher overnight, ending near best levels as inflation worries ease. Dow Jones up 53 points to (+0.15%). Up 455 points at best. Down 16 points at worst. S&P 500 muted, up 0.03%, and the NASDAQ gained 0.12%. US treasuries firmed. 30Y yields climbed after a US$23bn auction was awarded the highest rate since 2011. 2Y yields reversed an earlier slide and the 10Y yield rose about 10bps to 4.1%. Oils rally, driven by signs of a tightening market, paused as technical barriers stalled further advances. On the earnings front, Alibaba rose 3.7% after the company’s quarterly results topped forecasts and Disney jumped 4.8% despite posting mixed results and announced an upcoming price hike.  

• ASX to fall at open. SPI Futures down 20 points (-0.27%).

US headline annual inflation rose 0.2% MoM, in line with consensus. Up 3.2% YoY accelerating from 3% in June. Core CPI (ex-food and energy) is also up 0.2% MoM, matching forecasts. Up 4.7% YoY from 4.8% in June, below expectations of 4.8%. Results support disinflation and peak Fed narrative aka the “Goldilocks” narrative.

Major bourses in Europe rose overnight, but off best levels following positive inflation figures in the US. STOXX 50 +1.6% FTSE +0.4% DAX +0.9%, and CAC +1.5%. In Asia, markets were mostly higher Nikkei +0.84%, Hang Seng +0.01%, Shanghai Composite +0.31%. Growing debate whether China’s deflation could spill over into US and the global economy. JPMorgan analysts suggest a potential -70 basis point spillover to global core goods inflation and a connection between US CPI and China PPI movements. Macquarie strategists highlight that China's reduced demand could ease pressure on global supply chains, influencing the Fed's rate decisions, yet uncertainty remains due to commodity price fluctuations.

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