Elsewhere, Indonesian President Prabowo Subianto abruptly replaced Sri Mulyani Indrawati as finance minister, risking renewed financial turmoil for Southeast Asia’s biggest economy following violent protests in recent weeks against his administration.
In Japan, the implications of the nation’s latest political turmoil has spilled into markets. Long-maturity Japanese government bonds slumped Monday as Prime Minister Shigeru Ishiba’s decision to step down underscored expectations for looser fiscal policy.
China’s export growth slowed to the weakest in six months as a slump in shipments to the US deepened again, although a surge in sales to other markets kept Beijing on track for a record trade surplus.
To Megan Horneman at Verdence Capital Advisors, upcoming inflation data probably won’t be enough to change the likelihood of a Fed reduction in September. The biggest question for investors now is how many more rate cuts we will receive.
“After this week’s inflation data, we will get a better picture on what the Fed can do with rates,” Horneman said. “However, we are not out of the woods with inflation, and the Fed may deliver a ‘hawkish cut’ while reminding investors of their dual mandate, especially if inflation continues to move further away from their target.”
In commodities, oil rose for a second day as investors weighed the the prospect for softening demand after Saudi Arabia cut pricing for most of its grades.
