{"id":209701,"date":"2024-07-26T11:00:00","date_gmt":"2024-07-26T15:00:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=209701"},"modified":"2024-07-29T13:54:34","modified_gmt":"2024-07-29T17:54:34","slug":"trump-trade-rallies-on-ahead-of-a-big-week-fed-boj","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/trump-trade-rallies-on-ahead-of-a-big-week-fed-boj\/","title":{"rendered":"Trump Trade Rallies On Ahead of a Big Week: Fed, BoJ, Jobs: July 26, 2024"},"content":{"rendered":"\n

Market participants are piling into the Trump trade on the back of Fed friendly data reflecting a strong economy amidst cooperating price pressures. The Harris Trade is getting some love as well, however, as investors look past lackluster earnings reports from some of the Mag 7 members this week while hoping that next week offers better commentary on the AI front. Next week will also be eventful from a central banking perspective, with Tokyo and Washington on deck. The stronger yen has certainly weighed on global risk assets in the past few weeks, as the Bank of Japan considers hiking rates further while curtailing bond purchases. From the Fed, meanwhile, market bulls are looking for the delegation to commit to beginning the easing cycle in short order, while the bears are wishing that Powell and company deliver a message supporting further patience.<\/p>\n\n\n\n

Consumers Dip into Savings<\/strong><\/h2>\n\n\n\n

This morning\u2019s Personal Income and Outlays print reflected a similar dynamic as yesterday\u2019s gross domestic product<\/a> report: persistent consumption amidst aligning price pressures. The developments are already well known as this monthly report covering June is quite stale, however, and hardly a reason to celebrate. Consumer spending rose 0.3% month over month (m\/m) while incomes rose 0.2% m\/m, slower than the 0.4% notched in May on both fronts. The former indicator arrived in-line with expectations while incomes were projected to increase by 0.4%, or double the pace recorded. Household outlays were dominated by nondurables and services, which grew 0.5% and 0.2% m\/m, respectively, on a volume basis, while durable goods experienced a 0.2% decline. Folks sacrificed cash reserves to complete orders, however, with the personal savings rate dropping from 3.6% to 3.5% during the period.<\/p>\n\n\n\n

\"PCE\"<\/figure>\n\n\n\n

Core Arrives Hotter but Who Cares<\/strong><\/h2>\n\n\n\n

The inflation figures in the report accelerated in the short-term, or m\/m but came in at levels consistent with the Fed\u2019s 2% target on an annualized basis. The inflation figures, which include the Fed\u2019s favored core Personal Consumption Expenditure (PCE) Index, rose 0.1% overall and 0.2% excluding food and energy, both above May\u2019s numbers by roughly 5 basis points (bps) before rounding. The year-over-year (y\/y) results arrived at 2.5% for headline and 2.6% for core, similar to the previous report\u2019s 2.6% for both metrics. While results arrived in-line with the median estimate on the headline side, core came in 10 bps higher after rounding for both m\/m and y\/y versions. <\/p>\n\n\n\n

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US Consumer Spending is Mixed During Second Quarter<\/strong><\/h2>\n\n\n\n

Second-quarter earnings results paint a mixed view of US consumers, while at least one industrial company posted metrics that benefited from growing demand for semiconductor-related products. Consider the following earnings highlights:<\/p>\n\n\n\n