Stocks Hit Record Highs on Softer Inflation
- Joshua Dawe
- Aug 18
- 3 min read
Welcome to this week's market rundown. I’m covering key news, what’s on the economic calendar, how markets have been moving. Whether you’re trading or just keeping score, here’s what you need to know to stay one step ahead.
Trump Targets Cartels: Trump reportedly signed an order giving US forces more freedom to go after drug cartels, even abroad. Mexico’s president Sheinbaum firmly rejected the idea of American troops entering her country but highlighted ongoing cooperation, including the extradition of 26 suspected cartel members to the US.
Talks Over Gaza: Hamas officials landed in Cairo for early discussions with Egypt on ending the Gaza war. Netanyahu hinted he wants any deal to ensure all hostages are freed.
Trump-Putin Summit Looms: The White House downplayed Trump’s upcoming Alaska summit with Putin, calling it a listening exercise. Zelensky spoke with Trump beforehand and was upbeat. Meanwhile, Russia made its biggest advance in Ukraine in a year, seizing ground toward Kramatorsk.
US-China Trade Pause: America and China extended their tariff truce another 90 days, with a new deadline in November. Nvidia and AMD also struck a rare deal to hand over part of their China chip revenues to Washington, while Beijing quietly discouraged use of Nvidia’s H20 chips without imposing a ban.
Trump vs. Goldman’s DJ: Trump took a swipe at Goldman Sachs CEO David Solomon, saying he should step down over bad tariff forecasts and stick to DJing instead.
Markets Hit Records: US stocks jumped after softer inflation boosted hopes for a September Fed rate cut, pushing the S&P 500 and Nasdaq to new highs. Japan’s Nikkei and Topix also set records on trade optimism and stimulus bets.
Perplexity Eyes Chrome: AI search firm Perplexity stunned markets by offering $34.5bn for Google’s Chrome browser. The pitch came with a twist: it’s conditional on a possible antitrust ruling forcing Google to sell.
GPT-5 Stumbles, Then Shines: OpenAI’s GPT-5 launch faced hiccups when a glitch made the model seem less capable at first. Altman admitted the error but said fixes are now in place. Early signs suggest GPT-5 could be a powerhouse, especially in software engineering.
Calendar
Previous Week
UK Q2 GDP: +1.2% YoY (vs 1% consensus). Stronger-than-expected growth shows the UK economy holding up better than feared.
Japan Q2 GDP: +0.3% QoQ (in line with consensus, slightly above forecast). Modest expansion, steady but not spectacular momentum.
US July CPI: +2.7% YoY (in line). Inflation broadly matched expectations, though core is still sticky, keeping pressure on the Fed.
UK Unemployment Rate (June): 4.7% (unchanged, in line with consensus). No surprises, labor market remains stable.
China July Retail Sales: +3.7% YoY (vs 4.6% consensus, softer than expected). Consumer spending momentum is weak, a drag on recovery hopes.
This Coming Week
US FOMC Minutes (Aug 21): Markets will parse the July meeting details for any hints on timing of rate cuts.
Germany Manufacturing (Aug 21): Consensus ~48.6, still in contraction but stabilizing.
UK Manufacturing (Aug 21): Consensus ~48.3, also weak, suggesting continued struggles in the sector.
Fed Chair Powell Speech (Aug 22): Likely the week’s highlight for global markets. Traders will watch for tone on inflation progress and policy easing.
Previous Week: Tencent topped estimates, posting earnings of 6.79 versus the consensus forecast of 6.55.
This Coming Week: Walmart is scheduled to report earnings on August 21.
Market Movement
Equities
Movement: Stocks finished flat to higher on the week, with Japan’s Nikkei 225 leading the charge, up more than 3.5%.
SP500 Index: Gained about 1% on the week but looks technically stretched. VIX shorts keep piling in, alongside notable short interest in the index itself. Big Tech continues to price in perfection, so the upcoming earnings round will be key.
Rates
Movement: Japan’s 10-year yield keeps pushing higher, while Singapore’s 10-year has moved lower, worth keeping an eye on.
Fed Fund Futures: Market is pricing in three cuts by the December 12 meeting with an 80% probability, and a 21% chance of four cuts.
US10Y Yield: Up 1% week-on-week but still stuck in a range, waiting on fresh Fed guidance to break out either way.
Forex
Movement: GBP/USD rose about 1% while USD/JPY slipped around 0.4%.
Dollar Index: Flat on the week. Futures positioning has flipped slightly net long USD, though the dollar still looks cheap compared to rates.
USDJPY: Down 0.4% on the week as rate differentials narrow. Short positions are building aggressively while longs continue to unwind.
USDSGD: Flat on the week, rebounding from oversold levels. Rate differentials remain very supportive for long USD/SGD with a +2% positive carry. Linear regression sits near 10-year lows but has held a strong correlation this year.
Commodities
Movement: Mostly under pressure this week, with the oil complex weaker and RBOB gasoline plunging more than 8%.
Crypto
Movement: A quieter week after the recent rally. Ethereum held up with gains of about 4%, while Dogecoin and XRP slipped more than 5%.
Comments