U.S. has just released Inflation Rate and Core Inflation Rate reports for July. Inflation Rate increased by 0.5% month-over-month, in line with the analyst consensus.
On a year-over-year basis, Inflation Rate increased by 5.4% compared to analyst consensus which called for growth of 5.3%. Core Inflation Rate grew by 4.3%, in line with the analyst consensus.
S&P 500 futures are gaining some ground in premarket trading after the release of inflation reports. Inflation did not move higher, which is a major relief for stock traders.
Meanwhile, the U.S. dollar found itself under pressure against a broad basket of currencies. It looks that foreign exchange market traders expected that inflation reports would exceed analyst expectations, and they are forced to cut their long bets on the American currency.
Precious Metals Gain Ground After Inflation Reports
Gold and silver are moving higher after the release of inflation reports as U.S. dollar is under pressure while Treasury yields decline.
The yield of 10-year Treasuries has moved back below 1.35% which is bullish for precious metals that pay no interest.
Yesterday, gold mining stocks and silver mining stocks continued to fall. Today, they will have a good chance to gain some upside momentum in case the U.S. dollar and Treasury yields remain under pressure.
WTI Oil Declines As U.S. Reportedly Asks OPEC To Increase Production
WTI oil made an attempt to settle below the $67 level after a CNBC report indicated that U.S. asked OPEC+ members to increase oil production in order to put some pressure on gasoline prices.
Oil market traders are already nervous about the spread of the Delta variant of coronavirus so news about a potential increase of production easily put pressure on the oil market.
However, it should be noted that it will be hard to convince OPEC+ to boost production as not all OPEC+ members are U.S. allies. In this light, it remains to be seen whether U.S. effort will have any longer-term impact on oil prices.