Not what investors had in mind

This isn't the end of the week that investors had in mind when they were front-running Tuesday's inflation report in anticipation of another deceleration in price growth.

The mood has turned far more pessimistic over the last few days, from the possibility of the much discussed "dovish pivot" from the Fed next week to a potential 1% hike and recession next year. That's quite the shift on the back of one economic release but that's the weight that investors had put on the report in the days and weeks before.

Is the UK already in recession?

The UK is right up there as far as bleak outlooks are concerned, with the cost-of-living crisis already hitting the economy hard. Of course, it could have been much worse if not for the cap on energy bills but today's retail sales figures highlight how bad the situation already is, with some suggesting they're indicative of an economy already in recession. Sterling traders seemingly agree, with the pound slipping to new 37-year low against the dollar.

A welcome rebound

The data from China was far more encouraging overnight, with retail sales, industrial production and fixed asset investment all comfortably beating expectations. That wasn't enough to stop the yuan from trading above seven against the dollar or to convince anyone that the economy is back on track, but it's a welcome rebound.

OPEC+ threats lending support

It's been another volatile week for oil prices, with global growth fears dampening the demand outlook but OPEC+ sitting in the background ready to respond if prices drop too far. Brent crude remains above $90 at the moment which may stop the alliance from calling one of the emergency meetings it warned of but if growth fears continue to rise, that may change.

A knockout blow

Gold broke below $1,680 on Thursday and has been heavily under pressure since, falling close to $1,650 before finding some support. The yellow metal was already facing strong resistance above, failing to break through $1,730 even when the market was front-running a softer inflation reading and the CPI data appears to have delivered the knockout blow. With more tightening now priced in, the near-term outlook is challenging.

Bitcoin under pressure

As some suggested, the Ethereum Merge appears to have become a "sell the fact" event and bitcoin is potentially getting dragged lower as well. Of course, broader risk appetite has also taken a big hit recently, so that is probably strongly contributing to the move as we head into the weekend. With the price back below $20,000 once more, the focus may shift back to the June lows after a brief recovery last week.