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Theme: U.S. Inflation Data Drive September Rate Cut Speculation
U.S. Markets: New Highs on Rate Cut Hopes.
U.S. equities finished the week higher, led by small-cap stocks as the Russell 2000 outperformed the S&P 500 by the widest margin since April. The Dow Jones, S&P 500, and Nasdaq also advanced, with the latter two hitting record highs midweek before a modest pullback. Trade headlines took a back seat to economic data, though the U.S. and China agreed to delay tariff hikes by 90 days while talks continue.
Inflation: Mixed Signals from July Data.
Headline CPI cooled to 0.2% MoM from June’s 0.3%, driven by lower grocery and energy costs, while core CPI rose to 0.3%, pushing YoY to 3.1%, the highest since February. Services prices drove the increase, while tariff-impacted goods showed mixed moves. PPI surprised to the upside at 0.9% in July, with services again the main contributor, briefly denting rate cut bets.
The chart highlights the top 5 gainers and losers among Halal stocks in the USA for the week. The biggest gainer was Tempus with a 21.31% rise, followed by Sarepta Therapeutics (+20.57%), Intapp (+18.18%), Warby Parker (+16.84%), and Life360 (+15.85%). On the downside, Ubiquiti posted the steepest drop at -13.39%, trailed by Applied Materials (-12.27%), MicroStrategy (-8.48%), Hims & Hers (-7.92%), and H&R Block (-7.90%).
Consumer Spending: Retail Sales Stay Strong, Sentiment Weakens.
Retail sales rose 0.5% in July, led by auto and parts dealers, with June’s reading revised higher to 0.9%. Control group sales also gained 0.5%, signaling healthy GDP input. However, consumer sentiment fell to 58.6 in August on rising inflation worries, with year-ahead inflation expectations jumping to 4.9% from 4.5%.
Bonds: Curve Steepens on Hot PPI.
Treasuries were flat overall, as short-term yields dipped and long-term yields edged higher following PPI data. Municipal bonds were steady despite heavy issuance, with most deals well received. Investment-grade corporates outperformed with strong demand, and high yield bonds posted gains amid a stable macro backdrop.
Weekly market performance.
Key Takeaways.
• July CPI cooled slightly, but core inflation hit a multi-month high.
• Strong retail sales supported growth outlook, though sentiment weakened on inflation fears.
• Bond markets showed resilience, with corporates and high yield outperforming despite mixed inflation data.
Word of the Week.
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