United States

• CPI rose by a modest 0.2% m/m in July, in-line with market expectations. This kept the annual rate of inflation unchanged at 2.7% and raised rate-cut bets.
• The budget deficit grew to $291 billion in July despite tariff revenue surge. The overall year-to-date budget results showed a $1.6 trillion deficit, up 7%, or $112 billion, from the same period a year earlier. President Donald Trump imposed a 50% tariff on Indian goods to punish the country for buying Russian oil. In a dramatic ruling, most of President Trump’s global tariffs were declared illegal by a US appeals court that found he exceeded his authority in imposing them.
• The S&P 500 gained 2%, on growing conviction that the Fed will start cutting interest rates in September. The 10-year government bond yield dropped 10 bps to end the month at 4.23%. The market is currently pricing an 86% chance of the Fed cutting rates by 25bps during September.

UK/Europe

• The Bank of England (BoE) cut its key interest rate by 25 bps to 4%, around concerns about a weakening labour market.

Asia

• President Trump signed an executive order extending the deadline for higher tariffs on China until 9 November. Overall, domestic demand in China remains weak, with sales continuing to track below the historical trend. Authorities signalled that they would continue to take a measured approach to stimulus with a focus on managing overcapacity and addressing the “disorderly competition” among businesses that is adding to the deflationary trend.
• Japan posted unexpectedly strong GDP, helped by resilient exports, giving the central bank some of the conditions needed to resume interest rate hikes this year. GDP rose 1.0% on an annualised basis.

South Africa

• CPI increased a substantial 0.9% m/m, pushing the annual rate up from 3.0% to 3.5%. SA inflation is expected to move back to around 4.5% over the next 12 months, with several factors becoming less supportive — a decline in the fuel price, strong currency and China exporting deflation.
• Billionaire Jannie Mouton’s foundation has offered R7.2 billion for Curro Holdings and the Competition Tribunal has given the nod to Barloworld’s takeover.
• The FTSE/JSE All Share Index benefitted from improved global investor sentiment, rising 3.5% — led by resources — to reach another record high.