Wednesday's Markets Update (July 12, 2023)

13 Jul 2023 by rate3

On Wednesday, NASDAQ (o: 13,915, c: 13,918) surged on the opening as inflation fell, then fluctuated and closed at its highest since April 2022. Traders are currently pricing in a high chance for a 25 basis point increase in the fed funds rate this month. The odds for another quarter-point hike in September fell. At the same time, BTC (o: 30,721, c: 30,287) corrected a bit on technicals.

Details
Annual inflation in the US slowed to 3% in June, the lowest since March 2021. Energy prices fell 16.7% in June, led by a decline in fuel oil prices. Food prices rose 5.7%, while shelter prices rose 7.8% (accounted for over 70 percent of the increase). Core inflation, which excludes food and energy prices, fell to 4.8%, the lowest since October 2021.

Notable Macroeconomic Updates:
Mexico: Country's industrial production surged 3.9% in May from the previous year, the most since August 2022. This marked the 19th consecutive increase in industrial production, reflecting the Mexican economy's resilience to high interest rates. Output accelerated for mining, manufacturing, and energy and its transmission.

India: Country's industrial production rose 5.2% in May from a year earlier, accelerating from 4.2% in April and beating market expectations of 4.8%. Mining activities surged 6.4%, after a 5.1% rise in April. Factory activity increased 5.7%, while electricity generation rebounded.

India: Consumer inflation accelerates in June (the first time in five months) to 4.81%. Food prices increased to 4.99% (2.91% in May). The main drivers of inflation were an increase in prices of spices, cereals, pulses, and milk. The cost of vegetables declined, but not as much as in May. The cost of fuel and light, housing, miscellaneous goods and services, and clothing and footwear also rose The Reserve Bank of India targets inflation at 2-6%, but aims to bring it to the mid-point at 4%.