The Pulse August 19, 2024

On August 19, 2024, the economic landscape is marked by several key developments:

1. Inflation and Interest Rates:some text
   • The July Consumer Price Index (CPI) showed that inflation continues to slow down, with a 0.2% month-over-month increase, bringing the annual rate to 2.9%. This marks the slowest pace of inflation since March 2021. Core inflation, which excludes food and energy prices, also rose by 0.2%, with a year-over-year increase of 3.2%. The Federal Reserve is on track to consider rate cuts in September, as markets anticipate further easing due to softer economic data​ (Interactive Brokers)​ (BWFA).
2. Stock Market Performance:some text
   • Wall Street ended last week on a high note, recovering from a challenging start to August. This rally was driven by favorable economic data, including strong retail sales and fewer unemployment claims, which helped alleviate fears of an imminent economic slowdown. All 11 sectors of the S&P 500 gained, with the technology sector leading the way with an 8% increase​ (BWFA).
3. Bond Market Dynamics:some text
   • The bond market is expected to see declining short-term rates throughout the rest of the year as the Federal Reserve begins its anticipated rate-cutting campaign. However, intermediate to long-term Treasury yields may remain stable due to continued economic growth and the need to finance a growing deficit​ (Cerity Partners).
4. Global Markets:some text
   • European and Japanese equities are showing resilience, supported by strong earnings growth and more favorable monetary policies. However, Chinese equities continue to struggle due to trade tensions, a property market downturn, and demographic challenges, despite recent government support efforts​ (Cerity Partners).

These updates highlight a mixed but cautiously optimistic economic environment, with markets responding positively to the prospect of monetary easing and solid corporate earnings, even as global challenges persist.

Sources: https://www.interactivebrokers.com/campus/traders-insight/economic-update-august-19-2024/,https://www.bwfa.com/articles/weekly-economic-update-august-19-2024/,https://ceritypartners.com/insights/august-2024-economic-market-outlook/