US stocks rallied early as improvement with China’s COVID situation, optimism that a strong labor market will help the US consumer handle the latest wave of inflation, and after a wrath of positive news. 

With no US economic data releases scheduled for today and a quiet Fed due to the blackout period, US equities followed the rally that started in Asia.  With the exception of the latest Musk/Twitter drama, it was mostly positive news from corporate America, which translated to a good start for shares of Amazon, Eli Lilly, Spirit Airlines, and Didi Global. 

The stock market rally couldn’t hold as Treasury yields are edged higher as expectations grow for a much more slower deceleration with pricing pressures. Friday’s inflation report will likely show that inflation is not easing just yet, but that the odds of a recession are still low.  Wall Street will need to wait for a couple more inflation reports after this one before anyone can confidently make a call as to when the Fed may alter their tightening course. 


Boris Johnson will remain the Conservative leader and UK prime minister.  A leadership election won’t be needed after 211 Tory MPs voted for Johnson, while 148 MPs voted against, shy of the 180 needed to sack the PM.  This rebellion against PM Johnson was larger-than-expected and may have weakened his position on delivering tax cuts.   

The British pound held onto some of its gains as traders only cared about if this confidence vote would lead to a change in leadership. The path for the pound will still be determined by the pace of tightening by the BOE


Bullishness for crude prices have hit some exhaustion as the energy market has mostly priced in the EU’s ban on most Russian oil imports, a modest boost by OPEC+, and elevated prices that will surely lead to some demand destruction over the coming months. 

Crude prices started to weaken after US trade representative Tai’s comments suggested tariff relief was not coming anytime soon. Expectations were growing that the Biden administration might be doing whatever it takes to ease inflation, but a softer stance on China apparently is not happening. 

Oil rallied towards a three-month high after the Saudis delivered a large price increase to Asian customers for July. Despite the modest weakness with oil today, energy traders anticipate a tight oil market will last for a while. 


Gold prices could not shake off a major move higher with Treasury yields. The move in Treasury yields might be more of a reflection of a ton of supply that is going to hit markets, so the weakness for gold might not last too long.  Investors will fixate over Friday’s inflation report, which many believe should show that inflation is close to peaking. 

If the bond market selloff accelerates, gold could be vulnerable to a plunge towards the $1800 level.


Bitcoin is definitely forming a base as prices advanced despite some choppiness in equities.  Bitcoin above $30,000 is key for some short-term investors and a move above $33,5000 could trigger some technical buying.  

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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