U.S. Markets Rebound Amid Dip Buying and Dovish Hints
After a sour previous week, U.S. equities staged a strong comeback. Stocks rose as fresh dip buying emerged, dovish rhetoric from Fed officials boosted risk appetite, and talk of tariff relief helped sentiment. Treasury yields also turned higher, indicating renewed confidence in growth.
Still, as of today, U.S. stock futures show only modest gains—Dow futures up around 0.2%, with S&P 500 and Nasdaq‑100 futures also ticking higher. Traders remain cautious ahead of key inflation data due this week: CPI on Tuesday and PPI on Thursday. Markets could be rattled if inflation surprises to the upside.
Inflation Watch: CPI, PPI and Core Readings
Core CPI rose 0.3% last month, its strongest monthly gain in six months, pushing the year‑on‑year core rate to about 3.0%. Headline inflation showed a milder 0.2% gain, aided by easing gasoline and slower food price increases.Analysts await PPI data on Thursday, where forecasts point to a 0.2% monthly gain for headline PPI and a 0.3% increase for core.
Geopolitics Heats Up: Trump-Putin, Tariff Truce, Ukraine
Markets are closely watching a potential summit between President Trump and President Putin in Alaska on August 15. This geopolitical event could shape oil markets, sanctions policy, and investor sentiment.
At the same time, the U.S.–China tariff truce—established in April—is set to expire on August 12. Markets are hoping for an extension—or better yet, a new agreement between Trump and Xi.If it lapses, volatility could spike especially in Asia and Europe.
Oil and Commodities: Prices Slide as Peace Hope Grows
Oil prices continued to decline into this week. Brent crude fell nearly 1%, trading around $66 per barrel, while WTI dropped about 1.1%. This reflects hope that U.S.–Russia peace talks may ease sanctions on Russian oil. India is also a factor, with its refiners securing millions of barrels—but failure to reach a deal could spur a rebound.
Gold lost more than 1% as traders booked profits ahead of the Trump–Putin meeting, anticipating easing geopolitical risk could weaken safe‑haven demand. Traders are advised to monitor support/resistance levels, RSI, Bollinger Bands, moving averages and MACD to navigate the volatility.
China’s Macro Data: Deflation Pressures Persist
China’s producer price index fell 3.6% year‑on‑year in July, matching prior declines and underscoring ongoing industrial deflation. Meanwhile, July CPI was flat, signaling weak domestic demand despite some forecasts of temporary stability. This combination of deflation and stagnation is dimming the outlook for Chinese demand and weighing on global markets.
Fed Watch: Trump’s Expanding Search and Board Moves
President Trump is broadening the search for Fed Chair, considering at least ten candidates. Among them: former St. Louis Fed President James Bullard, Bush adviser Marc Sumerlin, former Fed Governor Kevin Warsh, National Economic Council director Kevin Hassett, and current Fed Governor Christopher Waller. All are expected to favor rate cuts, aligning with Trump’s economic agenda.
Markets hedge differently on each candidate’s profile. Waller, seen as a conventional but flexible pick, boosts confidence. Candidates closely tied to Trump—like Hassett and Warsh—raise concerns around central bank independence, potentially pushing up yields and weakening the dollar.
On August 7, Trump nominated his top economic adviser Stephen Miran to fill a vacant seat on the Fed Board through early 2026. He advocates aggressive rate cuts—possibly as low as 1%. Markets speculate his presence may embolden dissent at the Fed, perhaps even fortifying its independence long term.
Other Global Developments: Australia, G20, and Trade Risks
Australia’s central bank is expected to cut rates, signaling divergence from other policymakers around the world. Meanwhile, Norway is expected to hold rates steady.
Looking ahead, the G20 summit in Johannesburg this November is coming into view. South Africa, which holds the 2025 presidency, plans to push a development‑focused agenda and global debt reform. Markets and policymakers will track whether this forum can deliver meaningful cooperation.
Concerns linger over tariffs. Trump recently imposed a 25% secondary tariff on India for buying Russian oil, effective through mid‑September, and other broad-based trade penalties remain in development across sectors like semiconductors, pharmaceuticals, and aircraft.
Economic Summary:
| Theme | Key Takeaways |
| U.S. Inflation | Stronger core CPI rises risk derailing easing hopes; PPI also key risk this week. |
| Fed Speculation | Candidate choice could swing markets; Waller favours stability, others raise volatility. |
| Geopolitics | Trump-Putin meeting and tariff truce deadline could pivot oil, equities, and FX. |
| China Deflation | Ongoing PPI drop and flat CPI set the tone for cautious global demand outlook. |
| Energy & Metals | Oil down on peace hopes; gold losing lustre, traders advised to watch technicals. |
| Global Rates | Australia likely to ease; divergence ahead of G20 meaningful outcomes. |
Things Watch This Week
- Tuesday’s CPI report and Thursday’s PPI data—will they confirm or shake the easing narrative?
- Trump-Xi and Trump-Putin developments—any extension of the tariff truce or peace progress could reshape trade and energy markets.
- Fed Chair nomination updates and Miran confirmation—any signals of increased dovish leanings or politicization will drive interest rate and currency moves.
- China’s next data releases—continued deflation will reinforce global demand concerns.
- Commodity positioning—traders should use technical tools to manage volatility in gold and oil.
August may be considered a slow month but experts know well that it can surprise even the most veteran trader. With record-high equity markets, stretched currencies, and geopolitical faultlines converging, this is a time for alert risk management and strategy play.
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