Goldman Sachs: US July CPI highly anticipated but more sensitive to retail sales and jobless claims data this week
Dom Wilson, Senior Market Advisor at Goldman Sachs, stated that investors are closely watching the US July CPI data, but remain sensitive to other data this week as well. In addition to the CPI data, investors are paying more attention to retail sales and jobless claims data, believing that lower-than-expected retail sales could be a bigger obstacle to the current uptrend. Fluctuations in economic growth and employment reports may persist for some time
According to the financial news app Smart Finance, Dom Wilson, a senior market advisor at Goldman Sachs, stated on Tuesday that investors are preparing for the release of the US CPI data for July on Wednesday. However, with growing concerns about economic growth, investors will also remain sensitive to other data releases this week.
Goldman Sachs expects the core CPI for July in the US to increase by 0.16% month-on-month, with market consensus expecting a 0.2% increase month-on-month and a 3.2% increase year-on-year. This inflation data will provide a reference for the Federal Reserve to decide whether to start cutting interest rates in September. Traders have already priced this in.
However, Dom Wilson mentioned that besides the US July CPI data, there are more economic indicators to consider. He stated, "Given that the primary concern at the moment is the risk to economic growth, we can say that retail sales and initial jobless claims later this week will be more crucial. We believe that lower-than-expected retail sales data could pose a greater obstacle to the current uptrend."
The slowdown in US non-farm payroll additions and the rise in the unemployment rate have led to a significant decline in US stocks from their historic highs this summer. US stocks are currently in a recovery phase. During this process, the S&P 500 and Nasdaq indices achieved their fourth consecutive trading day of gains on Tuesday, with the Dow Jones index closing higher on three out of the past four trading days.
Dom Wilson remarked, "After a rapid easing of extreme conditions, the market environment has become more challenging, but our forecast for the US core CPI in July is more optimistic than the market consensus we have seen. Compared to the 25% probability of an economic recession believed by our US economic team, the market may still be pricing in a recession tail risk too high." "Therefore, as time progresses, the situation will further ease, but it may take some time for the market to feel confident about it. Meanwhile, around economic growth data, especially the upcoming monthly employment reports, the market may experience more volatility."