Analysts at ANZ offered a market wrap.
Key Quotes:
“Global equities were mixed with treasury yields down a couple of basis points and the USD weaker across the G10. Commodities were up a small amount. European bourses closed within 0.2% of Thursday with a late-day rally erasing most intraday losses. US stocks opened lower, but rose slightly on lighter volumes. Telcos and real estate offset consumer discretionary declines. The preliminary Michigan consumer confidence reading dropped on lower buying intentions due to unfavourable prices. This will be an important theme to monitor. The dollar weakened against all in the G10 with CAD outperforming after stronger CPI was released (3.0% vs. expected unchanged at 2.5%). WTI oil was up 0.7% to USD65.91 and gold climbed 0.9%.”
Higher prices taking a toll?
“The provisional University of Michigan August consumer confidence came in weaker than expected at 95.3 (mkt: 98.0) with current conditions leading declines at 107.8 (last: 114.4) and expectations steady at 87.3 (last: 87.3). Buying conditions for durables fell to the lowest in nearly four years, due mainly to the least favourable perceptions of prices in 10 years. Vehicle buying conditions were also viewed less favourably, with prices being judged the least favourable since 1984. Home prices were judged the least favourably since 2006. Surprisingly, perhaps, the expectation for inflation over 1 year was stable at 2.9% with a tenth uptick in long-term inflation to 2.5%.”
Canada inflation jumps:
“Canada July inflation came in well above expectations at 3.0% y/y (mkt: 2.5%; last: 2.5%), up 0.5% m/m. Energy costs were a big driver, up 14.2% y/y, and a spike in air transportation (28% y/y) also helped. Shelter costs also lifted. With capacity constraints building, the housing market rebounding, jobs plentiful, wage growth rising, investment growth buoyed, terms of trade higher, and NAFTA close to resolution, the Bank of Canada looks set to turn more hawkish.”
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