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Weekly Market Outlook

 

Thoughts on the Week Ahead: 
Week of July 15, 2024

Following the release of the CPI data, the market now prices a 90.30% chance of a 25 basis point (bps) rate cut at the US FOMC meeting on Sept 18th. We have also observed a market rotation towards disinflationary trades.

Here are some interest rate-sensitive asset classes, sectors, and markets that moved higher after the CPI report:
•  Bonds (e.g., TLT, ZROZ)
•  US Growth/Small Cap (e.g., IWM)
•  Global REITs (e.g., SCHH, CFA)
•  Utilities Sector (e.g., XLU)
•  China and Hang Seng Indices (short-selling curbs also contributed to their rise)

A Note on PPI
It is important to note that Friday's US Producer Price Index (PPI) report did not decline in line with CPI. PPI is a leading indicator of US inflation.

Short-Term Tactical for the Week Ahead
Given the mixed signals, our strategy for the coming week will be cautious and selective for the US and Singapore markets. We favour the Hong Kong market.

In the Longer Term
A fall in inflation could also mean weakness in the economy. Thus, despite our continued long and bullish stance on the US economy, we are constantly monitoring for changes in market momentum or any market-altering news or events.

Headlines for the week:
- US Corp Earnings (GS, BAC, MS, J&J, NFLX, and AXP)
- US Jerome Powell Interview, Retail Sales
- China Third Plenum Meeting, 2Q24 GDP, MLF Rate
- SG Jun NODX


Disclaimers apply

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