Data Shows Inflation Rising More Than Expected

U.S. Treasuries traded with little change today, after two
economic indicators pointed to rising inflation. U.S. 10-year yields are
trading at 1-month lows, as traders remain divided on the prospects of a rate
hike later in August. A jobs report to be released on August 4th should
shed more light on inflationary numbers; joblessness has declined steadily over
the last 3 months, lending weight to investors betting that the Fed will raise
rates. Investors remained divided on wagers for the coming hike, with
about 70% betting for a pause and 30% betting on a hike.

The U.S. Dollar staged a failed rally against the euro and the
yen today, after two economic reports showed inflation was increasing more than
expected. Despite a solid run, technical resistance and the weight of the
future ECB and BOJ hikes pushed the dollar back. With the Fed up in the
air about the prospects of another rate hike, the euro and the yen are poised to
move strong against the dollar for the rest of the summer. The ECB and BOJ
both have made plans to increase rates before the summer is out, putting
pressure on a cooling U.S. economy.

Crude oil traded higher today, up 0.6% at $74.85. A
tropical storm has formed off the coast of Florida, and though this particular
storm is not a huge threat, investors are getting a cold reminder of last year’s
Katrina and the effects wrought on supply. Crude could potentially
skyrocket if another major hurricane slams the East coast, knocking out
refineries, damaging ports and creating an overall terrible situation which
would rock crude prices. The Department of Energy releases crude
inventories tomorrow, which is expected to show a decrease in gasoline supplies.

Most metals rose today, as the hurricane season picks up speed
and the fighting in the Middle East takes a slight breather. Demand for
safe-haven futures today picked up, as gold rose about 2% and silver rose 3.2%.
Aluminum, on the other hand, fell 1.3% in trading today.

The softs traded mixed today, with cocoa up fractionally.
Coffee was down just over 1% and orange juice traded higher to close up 3.7%.

Grains traded mixed today, but mostly lower. Corn was up
0.6%, wheat was down 1.2% and soy was down 1%.

Meats traded fractionally mixed to lower. Feeder cattle
traded with no changed and potbellied pigs traded down over 3%.


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Growth In The Manufacturing Sector Accelerates In July (full

John Patrick Lee