Last week saw fresh US CPI data release which was mostly in line with consensus.
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The headline CPI was 0.2 per cent month-on-month (m/m) and 3.2 year-on-year (y/y) with core CPI up 0.2pc m/m and 4.7pc y/y.
The data should no doubt reinforce the widely held view that the US Federal Reserve could skip a hike in September's meeting.
The data should no doubt reinforce the widely held view that the US Federal Reserve could skip a hike in September's meeting.
- Christopher Hindmarsh, JBWere Limited
However, given the tight labour market, the possibility for further hikes later in the year is very real.
The knee-jerk reaction to the data was lower rates but a $23 billion auction of 30-year bonds by the Fed saw rates rise higher across the board.
The 30-year treasuries sold at a yield of 4.189pc and even rose to 4.26pc later in the trade period.
The yield curve steepened on with the two-year yield up 3.4bps to 4.84pc along with the 10-year up 9.6bps to 4.10pc.
Higher than expected US PPI (Producer Price Index) data came in late last week showing the highest gains since November last year.
PPI is a wholesale measure of inflation that measures the change of prices domestic producers receive for output.
In other words, PPI measures the price change from the perspective of the seller.
The core reading was up 0.3pc m/m against 0.2pc expected and resulted in two-year yields jumping by a further 10bps.
Concerns surrounding the Chinese economy continued last week as China's two major share indices both underperformed their international counterparts.
The Shanghai's CSI 300 Index fell by 3.39pc over the week and The Hang Seng finished on up on Friday down 2.38pc.
The NASDAQ also saw poor returns down 1.90pc across the week as Nvidia, the S&P 500's top performer this year, fell by 3.6pc on Friday - its fourth consecutive daily loss.
In other news, Argentina's markets have experienced massive volatility following a recent primary vote which demonstrated surprisingly strong support for populist politician Javier Milei.
The current sitting congressman identifies as a libertarian and has vowed to burn down the central bank of Argentina.
Following the primary vote, the country's central bank quickly devalued its official exchange rate by around 18pc to 350 pesos per dollar in an attempt to stabilise markets.
Anxiety deepens among investors in Argentina's already fragile economy with inflation running above 115pc.
- This article does not take into account the investment objectives, financial situation or particular needs of any particular person. Before acting on any advice contained in this article, you should assess whether it is appropriate in light of your own financial circumstances or contact your financial adviser. Christopher Hindmarsh is an adviser at JBWere Limited. JBWere Limited AFSL 341162.
