Inflation data raises the possibility of interest rate stability

The US core consumer price index decline

The US CPI report unveiled an uptick in inflation to 3.2% in July, surpassing the previous reading of 3.0%, though falling slightly short of the projected 3.3%. The core inflation index also eased to 4.7% year-on-year, with overall inflation registering a marginal 0.2% year-on-year increase.

During the July press conference, Federal Reserve Chairman Jerome Powell underscored the importance of scrutinizing such data when assessing potential monetary tightening, alongside the US jobs report. Post the inflation data release, market sentiment inclined towards the likelihood of policymakers maintaining the US interest rates at 5.25% in their upcoming September meeting, spurred by the core inflation index's dip from 4.8% to 4.7% in the preceding month.

In response to this development, gold initially surged to $1930 per ounce, then settled around $1920 before the market opened. Meanwhile, the US stock indices displayed a positive performance at the outset of the American session, with the industrial index marking an ascent of over 1% upon the report's issuance.

What's unfolding in the energy markets?

For the first time since November 2022, WTI prices concluded yesterday above the $83 per barrel level. This surge can be attributed to growing concerns about the Chinese economy's recovery, compounded by the release of lackluster trade balance data. Simultaneously, Saudi Arabia's commitment to curtail production by roughly one million barrels per day until September, and Russia's decision to reduce production by 300k barrels per day in the upcoming month, have added to the market sentiment. Presently, WTI is hovering around the $83 range.

On a different note, natural gas futures experienced an uptick during Wednesday's trading, surpassing 6% in gains. This escalation was fueled by a strike in Australian natural gas plants, introducing the potential to disrupt gas movement and supplies, especially as winter approaches. It's worth noting that Australia stands as the second-largest global exporter of natural gas. However, the futures took a downturn during today's trading.