Market Update

From the accompanying table, it's evident that the markets mostly trended downwards this week, though they managed to recuperate slightly as the days progressed.
Investors kept a close eye on US inflation figures. The consumer price index for July 2023 registered a 0.2% uptick, culminating in a 3.2% increase year-on-year. This latest inflation report seemed to align with market projections, eliciting a muted reaction. Although the consumer price index in July fell short of economic predictions, indicating a sustained deflation trend, the producer price index surpassed anticipations but still pointed to prices being more modest than the prior year. Given this contrasting data, market participants are forecasting a hiatus in the Federal Reserve's interest rate elevation in September.
The Federal Reserve appears set on its present trajectory. While they haven't ruled out the possibility of future rate escalations, they're likely to consistently convey this stance. The final decision on terminating rate hikes remains ambiguous, with the Fed poised to scrutinize the August CPI and employment figures to guide their choices.
The resilience of the UK's economy is conspicuous, even as businesses and consumers grapple with ascending interest rates. Recent GDP metrics unveiled a quarterly growth of 0.2% in Q2 2023, outstripping prevalent predictions of stagnation.
This economic surge can be attributed to a robust performance in June – evidenced by a 0.5% monthly GDP growth – along with a rejuvenation in the manufacturing domain and favorable weather conditions spanning the quarter till June. This unexpectedly robust growth has stoked expectations of further interest rate escalations by the Bank of England, especially during the monetary policy committee gathering on 21st September. However, we're skeptical about the feasibility of substantial rate augmentations given that the ramifications of prior hikes are yet to permeate the broader economy.
Elsewhere, Ireland witnessed a promising 2.5% annual surge in industrial production for June 2023, a marked recovery from the 12.4% downturn seen the prior month, largely propelled by a manufacturing rebound. Concurrently, the annual inflation rate for July 2023 dwindled to its lowest in 18 months, settling at 5.8%. Nevertheless, core inflation (which excludes energy and food costs) remains pertinaciously elevated, straining households. The European Central Bank has hinted at another rate rise in September, with officials voicing their dedication to perpetuating rate increases should core inflation persistently ascend.