DXY was uncertain Friday night.
AUD too.
Lead boots are stalled.
Gold is sniffing Fed capitulation. Oil is sniffing Ukraine peace.
Metals are trading DXY.
The big bear is intact.
EM trying again.
But junk stalled.
As yields popped, sniffing the opposite of gold.
The bubble expands.
This week, the big report is the US CPI. BofA.
Inflation set to rise in July For the JulyCPI report, we forecast headline CPI rose by 0.2% (0.24% unrounded) and core increased by 0.3% (0.31% unrounded) owing in part to tariffs.
If correct, headline inflation should increase a tenth to 2.8% y/y and core CPI should rise to 3.1% from 2.9%.
We expect core goods prices rose by 0.3% m/m, an acceleration from June, as tariffs should continue to put upward pressure on prices.
In addition to core goods, we forecast non-housing services inflation will pick up from 0.1% m/m in June to 0.3% m/m in July, owing in large part to a 2.0% m/m increase in airfares.
Based on our forecast for CPI and some other assumptions, our preliminary estimate for core PCE inflation in July is 0.29% m/m.
If correct, that would lift the y/y rate up to 2.9% given the base effects from last July when core PCE was0.17% m/m.
BofA is hawkish, expecting no cuts this year. I’m inclined to agree. Notably because the Fed is a long way from its inflation target, while the jobs market is being shielded from economic weakness by zero immigration.
Therefore, to me, AUD chaos is more likely to be down this week than up.
