Originally published at: This week in charts: Transatlantic data drop – InvestEngine Insights
US presidential debate
Kamala Harris improved her odds of winning the presidential election after the debate with former president Donald Trump on Wednesday evening.
While the exact odds of each candidate winning vary by prediction market (many sources disagree with each other), the consensus is that Harris’ chances improved after the debate, and also that the race remains extremely tight. There’s still disagreement over who’s ahead, as the race is too close to call:
US inflation is on the way down…
This week saw the release of the last set of inflation data before the FOMC’s meeting to decide the level of US interest rates next week.
Headline CPI edged down to 2.5%, a reduction from 2.9% in the previous month, but on the right track towards the central bank’s 2% target level for inflation. Core inflation, which excludes food and energy, is proving more difficult to subdue, coming in at 3.2%:
…Which means cuts ahead
While headline CPI in the US is heading in the right direction, stickier core and services inflation remains high enough that the market believes rate cuts are on the way.
Although there has been some speculation of a 0.50% rate cut next week, the markets suggest that a 0.25% cut is far more likely, with a weighted average expected rate cut of 0.27% next Wednesday:
The UK economy
Closer to home, the UK economy unexpectedly failed to grow for a second consecutive month in July. The economy was held back by drops in construction and manufacturing, with a 0.1% expansion in the key services sector, according to figures released on Wednesday from the Office for National Statistics.
The weakness comes after the economy also failed to grow in June, bringing 3 month GDP growth to 0.50%, and underlining the challenge facing chancellor Rachel Reeves as she prepares for Labour’s first Budget next month.
Oil prices still in the doldrums
Oil prices rose this week as investors regained confidence in the US economy following last week’s sell-off.
Despite the relief rally, oil prices are still well below their highs reached earlier this year. Brent crude oil, the international oil benchmark, saw a high of over $90 a barrel in April, fell to under $70 a barrel last week, and are now slightly off their lows at $72.
The returns of ETFs tracking oil producing companies are closely linked to the price of oil. The iShares Oil & Gas Exploration & Production UCITS ETF (SPOG) for example, is now down over 6% so far this year:
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