U.S. inflation remained stubbornly elevated in July, with the personal consumption expenditures price index rising 0.2% month-on-month, above the 0.1% forecast, pushing the annual headline rate to 3.7%. Core inflation, excluding food and energy, recorded a 0.246% monthly increase, close to the 0.3% threshold.
The data tempered risk appetite as global equities ended mixed Wednesday, with South Korea’s Kospi advancing 1% while Japan’s Nikkei and China’s CSI 300 gained 0.5%. Europe’s Stoxx 600, the FTSE 100 and Wall Street’s major indices hovered near flat, reflecting cautious positioning ahead of Friday’s keynote address by Federal Reserve Chair Kevin Warsh at the Jackson Hole economic symposium.
The U.S. dollar strengthened 0.3%, its largest advance in two weeks, while the Swedish krona fell 1%—its steepest decline in two months—and the Colombian peso approached its worst weekly performance since April. U.S. Treasury yields rose by 1-3 basis points, with the 2-year to 30-year yield curve flattening to its lowest close since the July Federal Open Market Committee meeting.
Commodities showed divergent trends. U.S. copper futures surged to a record $6.75 per pound, while Brent crude oil slipped 1% and gold fell 1%. U.S. natural gas prices rose 3% to a one-month high. The five-year Treasury auction drew a bid-to-cover ratio of 2.37, the highest of the year, with officials calling demand "reasonable."
Corporate earnings and economic data added to the mixed backdrop. Second-quarter U.S. GDP growth was unrevised at 1.5%, while after-tax corporate profits as a share of GDP climbed to a record 12.1%. Personal savings rose to 3.0% from 2.6%, but inflation-adjusted consumer spending was flat in July.
Among individual stocks, Moderna declined 5% and Eli Lilly fell 4%, while Honeywell gained 2.3%. Nvidia, the $5 trillion AI chip giant and the world’s most valuable company, reported second-quarter results that topped expectations but provided a third-quarter revenue outlook that excluded China data center chip sales. Its shares fell as much as 3% in extended trading, with gross margins projected to dip to 74% from 75% in the prior quarter.
Upcoming data includes U.S. weekly jobless claims, trade figures for July, and earnings from Marvell Technology, Workday and Dollar General.
