INFLATION DECLINED
According to the latest Personal Consumption Expenditures (PCE) report, there was a slight decrease in inflation in June. The PCE price index, which the Fed uses to measure inflation, increased by 0.1% monthly and 2.5% annually. Core inflation, excluding food and energy, also rose in line with expectations. Moreover, the report showed that goods prices fell while services prices increased. Housing-related prices slightly decelerated in June, while personal income rose less than expected, and spending met forecasts.
DEMAND OVERSHADOWED
U.S. crude oil is facing its third consecutive weekly decline, as worries about demand from China outweigh strong U.S. economic growth. Despite the U.S. economy expanding by 2.8% in the second quarter, concerns arise as oil imports to China declined significantly in June. China, the world’s largest crude importer, saw a 10.7% decrease in oil imports and a 32% drop in refined product imports year over year. Today’s energy prices show a decrease in West Texas Intermediate and Brent contracts, while gasoline prices remain relatively stable. Natural gas prices also saw a slight decrease. The recent surprise rate cuts in China have raised concerns about the country’s economic health, leading to uncertainties about future energy demand.
LIMITED RISE
Gold prices have experienced a slight uptick following a sharp decline it encountered following the release of the latest GDP report. As of 8:00 AM CST, spot gold rose to just below $2,371 per ounce. However, despite this increase, gold prices are still down by 1% for the week, reaching their lowest point since July 9. Experts highlight that the positive economic data revealed by the GDP, impacted gold prices negatively, as the precious metal tends to underperform when other asset classes excel during periods of economic strength; they remark that due to the stronger-than-expected U.S. economic growth, investors tend to shift towards other assets, resulting in a decrease in demand for gold. In fact, gold prices have seen a 4.5% decrease since reaching a record high of $2,483.60 on July 17, as expectations of a rate cut by the Federal Reserve in September have increased.
RALLY RETURNED
Bitcoin has started the day showing a remarkable performance compared to other cryptocurrencies as it increased by 4.4% and has managed to reach the $67,000 mark once again. In addition, as reflected by the CoinDesk 20 Index, the broader market also saw a 3.3% uptick. Notable gains were seen in Solana’s SOL, which spiked by 5%, while major tokens like Ethereum (ETH), Binance Coin (BNB), and Cardano’s ADA also recorded a 3% surge. Additionally, Dogecoin (DOGE) rose by 4%, with Solana-based memecoin popcat (POPCAT) leading the category with an impressive 8% jump. Moreover, AAVE, the native token of the Aave decentralized finance (DeFi) protocol, surged by 15% following a proposed token buyback initiative aimed at reinvesting protocol revenue into buying back AAVE tokens from the secondary market.
MASSIVE SELL-OFF
Computer-driven macro hedge funds recently sold $20 billion in equities and are expected to shed an additional $25 billion over the next week following a stock rout sparked by disappointing earnings reports from Tesla and Alphabet. This massive risk-unwinding event triggered a sell-off, which initially began as rotational as investors moving from small- to mega-cap stocks, however, it has now evolved into a broader index deleveraging. If market volatility persists, more selling is anticipated, potentially leading to a rapid increase in the sell-off. As a result, hedge funds are becoming more bearish, reducing long positions and increasing bets on falling stocks. Nevertheless, it is worth highlighting that despite the current market turbulence, some investors believe that “momentum stocks” are still trading at higher values than they are actually worth and therefore remain good investments.
