In addition to statements by Fed Chairman Jerome Powell, it was new US inflation data in particular that drove investors this week. Overall, the question marks over the future shape of US monetary policy remain a key issue for the time being. This Friday, US price data and the publication of quarterly results from major US banks are likely to be in focus again.
DAX Chart
Source: Tradingview
No clear statements before the US Congress: Powell continues to leave investors in the dark
Jerome Powell gave his semi-annual speech to the US Congress on Tuesday. In his opinion, "more good data" is needed to strengthen confidence that inflation is moving sustainably towards the 2% target. The Fed will therefore decide on the future course from "meeting to meeting", he said.
Many market participants are currently expecting an interest rate cut of 25 basis points next September. According to the CME Group's "Fed Watch Tool", the probability of this scenario is 86.4%.
US inflation weaker than expected - interest rate cut fantasies gain momentum
While the economic data calendar in the first half of the week was generally straightforward, the final inflation rates for the Federal Republic of Germany on Thursday were as high as expected at 2.2% (year-on-year), compared with 2.4% in May, and therefore did not come as a major surprise.
However, the US inflation data (core rate), which at 3.3% was below expectations of 3.4%, is likely to have been the highlight of the week.
Consumer prices, including the drivers energy and food, were also weaker than expected at 3.0% (3.1%). In the previous month, price pressure had still amounted to 3.3%.
The decline in inflation should give the US Federal Reserve (Fed) fewer powerful arguments to keep the key interest rate level high for longer, which should consequently boost interest rate cut fantasies.
Investors cash in on tech heavyweights in the USA - US price data and reporting season in focus
Despite the positive inflation data, investors cashed in on industry giants NVIDIA, Apple, Microsoft and Tesla on Thursday, which significantly dampened sentiment. As individual stocks carry a particularly high weighting, they can consequently have a major impact on stock market activity.
At 14:30 today, investors are likely to focus on the development of US producer prices, which are also seen as an important guide to future inflation trends. In this case, an increase of 0.1% is expected compared to the previous month (previously: -0.2%).
Michigan Consumer Sentiment for the month of July will be released at 4:00 pm.
The reporting season in the United States is also likely to slowly but surely move into the focus of investors. The major banks Citigroup, JPMorgan and Wells Fargo are presenting their figures today.
