Due to lower-than-expected inflation in the US, equity markets rebounded on Wall Street

The global market went from caution to euphoria on Tuesday as the latest inflation data for the US economy was released. lower than expected. After it was confirmed that prices did not rise in July from the previous month and that the country’s year-on-year inflation remained at 8.5%, the main indicators of Wall Street opened with strong raises.

Tech Nasdaq bounces over 2% from the beginning of the wheel, followed by the S&P 500 which jumped almost 1.7% and the Dow Jones, which recovered 1.5%.

“US inflation below expectations offers room for a significant rebound in demand for risky assets. North American stock market futures trading flat pending data continued to rise more than 1% above after knowing the number, “pointed to a report by Aurum Valores.

Juan Manuel Franco, of the SBS Group, explained that despite this pause in rising prices, year-over-year CPI in the US remains very high. “We believe that, despite the slowdown in inflation in July, the dynamics of the labor market, which remains very robust, could lead the Fed (the central bank of the United States) to maintain magnitude in the excursions (ups) of the last two meetings (75 basis points) of September “, She said.

“The Fed shouldn’t be too confident after this surprise on the downside of inflation and you should keep your position falcon until we begin to notice a certain solidity in the downward dynamics of inflation. Moving forward, we believe that the dynamics of the labor market, in particular wages, must be followed closely; and the dynamics of the prices of services, especially in the persistent components.

inflation 0%

Inflation slowed more than expected in July in the United States, mainly due to the drop in gasoline prices at stations, although it still remains at very high levels and this could cause the Federal Reserve to drastically raise interest rates. still.

Consumer prices rose 8.5% in July year-on-year, according to the consumer price index (CPI) pupublished Wednesday by the Department of Labor. And in the month, inflation is zero, which means that prices, against all expectations, have not increased since June.

Driven by aggressive consumer spending on their savings in times of the covid-19 pandemic, obstacles in the global supply chain, shortage of domestic workers and Russia’s war on Ukraine, CPI was up 9.1% yoy in June, the highest in 40 years.

But it isThe consumer price index for July remained unchanged from the previous monthr, well below the expected increase, while CPI, excluding food and energy products with volatile prices, rose just 0.3%, the lowest in four months, according to the data.

Consumer prices have maintained their upward trend in the United States and this has worn down household budgets and, by extension, the popularity of the country’s president, Democrat Joe Biden, who took office in January 2021.

Opponents accuse the president of fueling rising inflation with his massive $ 1.9 billion state aid package to mitigate the effects of the pandemic, launched in March last year shortly after his inauguration.

Republicans renewed criticism of Biden’s economic policy, warning that Sunday’s Senate approval of his massive health care and climate bill dubbed the “Inflation Reduction Act” would do the opposite of its purpose. declared. .

But experts fear that the slowdown in inflation linked to falling gasoline prices may be offset by rising house prices.

“The biggest problem is what happens to housing costs and rents,” KPMG chief economist Diane Swonk wrote on her Twitter account.

NEITHER