Market Briefing: Markets Consolidate After Spectacular Rally
The most politically-incorrect word in economics is back. Mentions of “transitory” inflation have come into vogue again after yesterday’s data showed headline prices were unchanged in July after rising every month for the last two years, with the core measure also rising by less than expected. Market participants are increasingly convinced the Federal Reserve will slow the pace of hikes, lowering long-term rates and making monetary conditions more accommodative. Last week’s tightening in financial conditions has largely reversed, with yields back to pre-non-farm payrolls levels and the dollar dramatically weaker against most of its major rivals. The greenback slipped as...