US index futures have jumped 0.5% to 0.9% this morning following a benign US inflation report. Over in Europe, the Dax is up 0.75% while the FTSE is up 1.3%. Energy action is mixed with WTI Crude Oil up 0.9% and Natural Gas down 1.8%. In metals action, Gold is up 0.7% and Copper is up 1.4%.
Inflation pressures in the US continue to ease, taking some pressure off of the Fed to resume raising interest rates. The Consumer Price Index fell off even more quickly than expected in June (3.0% vs street 3.1% and previous 4.0%). Perhaps even more importantly, Core CPI declined more than expected as well (4.8% vs street 5.0% and previous 5.3%). The US 10-year treasury note yield has dropped back toward 3.90% on the news.
The Bank of Canada is still widely expected to raise its overnight rate this morning by 0.25% to 5.00% when it announces it latest monetary policy decision at 10:00 am EDT. Investors may look to today’s statement and the 11:00 am EDT press conference for hints about whether the central bank thinks more rate increases may be needed and if so, how many and when? Any assessments related to the state of the economy, global trends and the health of the banking system internationally may also be of interest to traders. Overnight, the Reserve Bank of New Zealand, who has been the hawkish leader in the current monetary tightening cycle, paused its benchmark rate at 5.50% overnight.
Confession season remains quiet ahead of tomorrow’s kickoff to US earnings season with Pepsico and Delta Air Lines up first. Last night Canadian retailer Aritzia beat expectations on EPS ($0.10 vs street $0.09), and sales ($462M vs street $460M).
