World oil prices continued to bubble back up above $85 a barrel, meantime, as U.S.-Iran hostilities persisted even as President Trump U-turned on plans for a 20% toll on Hormuz shipping. A resumption of the blockade on Iran's ships goes into effect today.
Elsewhere, China's second-quarter GDP growth slowed to a below-forecast 4.3%, although June industrial and retail updates were above estimates. The yuan firmed. Asia stocks are up more broadly, as are U.S. stock futures ahead of Wednesday's bell.
Today's events to watch
U.S. June PPI (8:30 a.m. EDT), New York Fed manufacturing survey for July (8:30 a.m. EDT)
Fed issues Beige Book (2 p.m. EDT)
Fed's Lisa Cook, New York Fed's John Williams and St. Louis Fed's Alberto Musalem speak
U.S. corporate earnings: BlackRock, BNY, Morgan Stanley, Johnson & Johnson
Markets take comfort from cooler U.S. inflation
A torrent of new information hit markets on Tuesday, with a mostly positive tilt for both stocks and bonds.
A surprisingly large decline in U.S. consumer price inflation for June soothed interest rate hike nerves, with the headline drop clearly tracking big swings in energy prices.
I'll get into that and more below.
Earnings season gets underway with a mixed response
The corporate earnings season also kicked off in earnest, with the big banks all doing well on a mix of volatile market trading and big fee paydays from a wave of IPOs. Goldman Sachs' stock was the pick of the bunch as it surged 9%.
It was more mixed in the tech world. IBM plunged 25% in its biggest one-day drop on record after a big miss and an admission that it had flubbed the switch of business trends from software services to AI data centre buildouts.
It also said that AI spending was eating into customers' software budgets. That caught many software service stock prices in the slipstream of IBM's own slide.
But Europe's ASML reported blockbuster results on Wednesday, and much like TSMC's sales update earlier this week, the chip manufacturer highlighted continued chip sector demand as it upped its annual revenue forecasts yet again.
Core CPI eases for the first time in more than six years
The drop in headline U.S. inflation may well be reversed in July given the resumption of hostilities in the Gulf, but the first drop in monthly core CPI in more than six years — a marginal fall of 0.02% — takes the annual core inflation rate down to just 2.6%.
Futures have wiped out almost all chances of a Federal Reserve rate hike later this month as a result, and Treasury yields fell back sharply.
Fed Chair Kevin Warsh gave little away in his congressional testimony on Monday but restated the Fed's determination to get inflation back to its 2% target.
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