Stocks gain ahead of June CPI report

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<li>US June CPI M/M: 0.3%e v 0.1% prior; Y/Y: 3.1%e v 4.0% prior; Core CPI (ex food and energy)M/M: 0.3%e v 0.4% prior; Y/Y: 5.0%e v 5.3% prior</li>
<li>Microsoft gets go-ahead to buy Activision; prompts excitement for further deal making.</li>
<li>Impressive demand for 3-year note auction</li>
</ul>
<p>US stocks rose as bond yields remained capped as Wall Street looks like it is ready to move beyond a pivotal inflation report that should suggest interest rates will stay higher for longer. ​ Headline CPI might fall to 2.9% and core could see the lowest reading since 2021, but sticky inflation signs will likely remain. ​</p>
<p>Stock market sentiment also got a boost as profit estimates for JPMorgan eye another strong quarter. ​ Citigroup and Wells Fargo are expected to post weaker profits. ​</p>
<p>Broadening strength is also exciting the stock market bulls as cyclicals performed well. ​ In order for stocks to continue on rising, Wall Street just can’t rely on the AI trade.</p>
<p><strong>UK Wages are too hot</strong></p>
<p>​The BOE is going to have a tough decision with the August 3rd policy meeting as hot wages should keep the bets going for further tightening. ​ Weekly earnings at 7.3% matched last month’s, which was also the record high seen in mid-2021. ​ The case for the BOE to hike by 50bps got a lot stronger and that has helped take the British pound to a 15-month high against the dollar. ​</p>
<p><strong>Oil market to remain tight</strong></p>
<p>Crude prices are getting a boost as expectations grow for the oil market to remain tight despite all lingering growth concerns. ​ The IEA expects strong demand from China and developing nations. The short-term crude demand outlook shouldn’t be that bad as everyone is taking a vacation that requires some travel this summer.</p>
<p>WTI crude has a solid floor in place and it will take a lot to go wrong for oil prices to lose its footing. ​</p>
<p><strong>Gold tries to shine</strong></p>
<p>Gold hit a 3-week high but traders won’t see an extension of this rally until we get beyond the inflation report and possibly some bank earnings. ​ Gold bulls want to see inflation expectations to continue to tumble. ​ Tomorrow’s inflation report if cooler than expected could help gold find a home above the $1950 level. ​ ​ ​</p>
<p>What might prove troubling for gold is what is shelter disinflation. ​ Shelter prices are coming down, but not quickly enough and in several cities, rents are still increasing. ​ Gold will have to fight more hawkish Fed speak, but for now it seems the $1900 level could hold. ​</p>