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[Quick Facts]

1. U.S. July CPI reinforces the market's judgment that inflation continues to fall.

2. Australian LNG producers are in talks to avoid strikes.

3. Trump refuses to sign a Republican loyalty pledge.

4. Kazakhstan plans to impose six-month restrictions on LPG exports.

5. Fed's Daly says there's still more work to do on balancing the economy despite the falling inflation.

6. Initial jobless claims rise, but it's not enough to cause concern.

[News Details]

U.S. July CPI reinforces the market's judgment that inflation continues to fall

U.S. CPI rose 3.2% year-on-year in July, lower than market expectations of 3.3% but higher than the previous reading of 3%. Core CPI increased by 4.7% y/y, the lowest level since October 2021, compared to market expectations of 4.8% and the previous reading of 4.8%.

In particular, energy prices fell both y/y and m/m, but they appeared to have a lower-than-expected impact on the overall CPI. Goods and services inflation also slowed y/y, but services inflation remained high at 6.1%. Housing inflation contributed 90% of the CPI increase, making it the main driver.

This CPI report reinforced the market's judgment that inflation continues to decline. There is good reason to believe that the Fed's rate hikes have not yet worked their way through the economy. It also solidified market expectations that there would be no rate hike in September.

However, with inflation coming to nearly 3%, it will become increasingly difficult to keep reducing inflation. The annual inflation rate may not slow down significantly or can even rebound again for the remainder of the year, ultimately staying around 3%.

Australian LNG producers are in talks to avoid strikes

Two Australian Liquefied Natural Gas (LNG) producers held talks with labor unions on Thursday to try to avoid a strike that could disrupt global supplies. The prospect of labor disputes at three sites in Western Australia sent European gas prices up 40% overnight amid supply concerns. The three sites, owned by Australia's Woodside Energy Group and U.S. Chevron, account for 10% of global supply and half of Australia's LNG production.

Trump refuses to sign a Republican loyalty pledge

According to a report on "The Hill" website on Aug. 9, former U.S. President Donald Trump says that he won't sign the loyalty pledge required by the Republican National Committee for candidates to participate in the first primary debate. Trump won't sign a pledge to support the Republican nominee if he loses the GOP presidential primary.

Kazakhstan plans to impose six-month restrictions on LPG exports

The Ministry of Energy of Kazakhstan has published a draft decree on the introduction of export restrictions on liquefied petroleum gas (LPG) in the portal of public discussion of normative acts, Kazinform reports. According to the draft, a six-month restriction will be imposed on the export of LPG by road and rail transportation. According to the Ministry of Energy, Kazakhstan currently regulates the retail prices of LPG. As a result, more users and industrial enterprises are rapidly switching to this fuel.

Fed's Daly says there's still more work to do on balancing the economy despite the falling inflation

Federal Reserve Mary Daly said on Thursday that although inflation and job growth are falling as expected, there is still more work to be done to balance the economy, and she wants more evidence before deciding whether to raise interest rates further. She argued that while inflation is falling, it's still too high, and the latest CPI report is consistent with the gradual slowdown expected by the Fed.

Daly also said that she has seen the economy is slowing down, but it has not yet reached the point they want. In addition, companies are struggling to find workers. The Fed has "more work to do" and has not yet decided whether to support another rate hike next month or how to complete her economic forecast. The Fed is likely to keep rates at peak levels for much longer, with no discussion of a cut until next year.

Initial jobless claims rise, but it's not enough to cause concern

U.S. initial jobless claims surged last week, but it was not enough to raise market concerns about the continued strong job market. The U.S. Department of Labor announced on Thursday that in the week ended August 5, the number of U.S. initial jobless claims increased by 21,000 to 248,000, higher than the number of 227,000 in the previous week. This was the largest number of initial claims in five weeks. But it wasn't enough to cause the market to worry about the continued strong job market in the U.S.

Considering the difficulty in hiring over the past two years, companies are likely to keep their worker for as long as possible, even if the economy weakens. That's led to most companies retaining employees, with the exception of a series of layoffs in the tech sector earlier this year.

[Focus of the Day]

UTC+8 14:00 U.K. GDP MoM (Jun)

UTC+8 16:00 The IEA publishes its monthly crude oil market report

UTC+8 20:30 U.S. PPI YoY (Jul)

UTC+8 22:00 U.S. UMich Consumer Confidence Index Prelim (Aug)