TD Securities’ James Rossiter discusses UK political developments and their market implications, focusing on the race for the next Chancellor under expected Prime Minister Burnham.

Producer inflation in the United States, as measured by the change in the Producer Price Index (PPI), declined to 5.5% on a yearly basis in June from 6% in May, the US Bureau of Labor Statistics (BLS) reported on Wednesday. This reading came in below the market expectation of 6.2%.

Standard Chartered economists Hunter Chan and Shuang Ding note that China’s Q2 Gross Domestic Product (GDP) growth slowed to 4.3% year-on-year, below the 4.5–5.0% target range, with domestic demand remaining soft.

United States Producer Price Index ex Food & Energy (MoM) below forecasts (0.4%) in June: Actual (0.2%)

Canada Wholesale Sales (MoM) above forecasts (-0.7%) in May: Actual (0%)

United States Producer Price Index (MoM) below expectations (0%) in June: Actual (-0.3%)

United States Producer Price Index ex Food & Energy (YoY) below forecasts (5.2%) in June: Actual (4.7%)

United States Producer Price Index (YoY) registered at 5.5%, below expectations (6.2%) in June

United States NY Empire State Manufacturing Index came in at 15.6, above expectations (8.8) in July

Brown Brothers Harriman’s (BBH) Elias Haddad highlights broad Norwegian Krone (NOK) underperformance after Norway’s underlying inflation dropped to an 18‑month low, below Norges Bank and consensus projections.

United States MBA Mortgage Applications dipped from previous -2.2% to -2.7% in July 10

The Bank of Canada (BoC) is widely expected to keep its policy rate unchanged at 2.25% on Wednesday. This would be the sixth consecutive event with the central bank keeping its hand steady.

DBS Group Research economist Samuel Tse and Senior Rates Strategist Eugene Leow analyse USD rates after softer June CPI data. They note the US Treasuries curve bull steepened as headline and core CPI surprised to the downside, with energy and some core services prices falling.

Frantisek Taborsky at ING says lower US inflation and reduced Fed hike expectations bring relief to CEE FX, despite higher Oil and US–Iran tensions. He maintains a bullish view on the Czech koruna and Hungarian forint, expecting more gains in coming days.

European Central Bank (ECB) policymaker and Governor of the Bank of Italy, Fabio Panetta, warned in the European trading session on Wednesday that inflationary pressures in the Eurozone economy could hover around 3% and will likely remain above that level beyond this year.

OCBC’s Sim Moh Siong and Christopher Wong note that Silver has risen nearly 2%, outperforming Gold’s 1.2% gain on the back of a softer US Dollar (USD) and reduced Fed hike expectations after weak core Consumer Price Index (CPI).

European Central Bank (ECB) Governing Council Member and President of the Deutsche Bundesbank, Joachim Nagel, said during European trading hours on Wednesday that the central bank should be prepared for monetary policy adjustments if needed.

People’s Bank of China (PBoC) Deputy Governor said during the European trading session on Wednesday that the central bank remains committed to loose monetary policy conditions to support overall demand.

ABN AMRO’s Rogier Quaedvlieg reviews the latest United States (US) Consumer Price Index (CPI) downside surprise and its implications for the Federal Reserve (Fed).

China New Loans below expectations (2000B) in June: Actual (1610B)

Rabobank strategist Michael Every notes Brent Oil holding steady around $85-86 per barrel after an aggressive short squeeze. Every links this stability to ongoing Middle East tensions, United States (US) sanctions enforcement in Hormuz, and strategic efforts to develop alternative pipelines.

China M2 Money Supply (YoY) registered at 8%, below expectations (8.5%) in June

Spain Harmonized Index of Consumer Prices (YoY) in line with forecasts (3.6%) in June

Spain Consumer Price Index (YoY) meets expectations (3.2%) in June

Spain Harmonized Index of Consumer Prices (MoM) meets forecasts (0.6%) in June

Spain Consumer Price Index (MoM) in line with forecasts (0.6%) in June

Deutsche Bank strategists note that softer United States (US) Consumer Price Index (CPI), gains in chipmakers and strong bank earnings supported US equities despite sharp weakness in software stocks.

Japan’s Prime Minister Sanae Takaichi said on Wednesday that food inflation has decelerated slightly but still remains high. 

Volkmar Baur at Commerzbank highlights that China’s weak domestic economy and reliance on exports constrain upside for the Chinese Yuan. Despite solid export growth and sizeable trade surpluses, investment and real retail sales remain soft.

European Central Bank (ECB) Governing Council member Martin Kocher said on Wednesday that the central bank prepared to implement monetary policy measures whenever necessary.