Daily Market Commentary 13th August 2021

US Inflation was dismissed as peaking and this allowed equity markets to surge to record highs in the previous session. US PPI was released overnight and could not be dismissed as ‘peaked’ and ‘transitory’. The PPI measures the input costs into the economy and will directly translate into inflation. This number surged to 1.1% for the month and 7.8% for the year! This is a big number and shocked very few, but did cast doubt on the narrative from the Fed, surrounding the temporary nature of inflation.

UK released a slew of data overnight, but failed to meet lofty expectations. UK GDP was in line with expectations after the re-opening of the economy, while Industrial/Manufacturing Productions was soft, as was construction. The GBP slipped back to 1.3800, while the EUR drifted to 1.1730 after Industrial Production also failed to meet expectations. The NZ Business PMI might trigger some interest in local markets, if it is outside the margin of expectations and market attention will now focus on tonight’s University of Michigan economic sentiment report.