Morning Brew August 12 2021

Good Morning,

The US CPI failed to provide the clarity  we were hoping for. The number came out exactly as predicted by the Reuters Poll, meaning inflation is high but slightly off the high last month. That means all narratives can play out and we depend on interpretation by the Fed. There is a strong case to be made for tapering, if the Fed wants to continue supporting the economy, there is room in the argument that inflation was indeed transitory and there was no need for action. The expectation is that roadmap will be announced at the Jackson Hole conference end of month, currently Fed speakers seem to be testing the mood with Esther George and Robert Kaplan arguing for tapering in the short term.

Markets seem to be mostly of the opinion that the Fed wants to remain supportive and Equities rise broadly to new highs. The Dow ends up 0.62%, the S&P 500 0.25%, the Nasdaq down 0.16% the Dax closes above 15800.

Rates swing but return to yesterday’s levels, the USD Index falls just below 93, EURUSD gains to 1.1743, GBPUSD 1.370, Bitcoin falls to 45100 Gold and Silver rise off the lows to 1750 and 23.40.

Zurich Insurance first-half business operating profit jumped 60%

Delivery Hero DHER.DE raised its 2021 outlook

Over the next few days I would expect more and more fed speakers to emerge with comments and testing the water how well markets receive plans, for today, we expect EU Industrial Production at 11:00 CET, Initial Jobless claims and the US PPI at 14:30

In addition the US budget and the debt ceiling will be in the spotlights

Trade safely

(refinitv)