HG MARKETS:

After a rather muted Consumer Price Index (CPI) report on Wednesday, the financial markets concluded the second week of August with more quiet. With the CPI index increase dropping to 0.2% in July, the overall inflation rate dropped to 2.9%, a figure that the markets had previously factored in. Energy assets, which had been falling since May 2024, started to level out at last. This halt points to a possible change in natural gas and crude oil patterns. For the time being, inflation seems to be decreasing, even though the CPI and inflation may rise in August. The 30-year U.S. Treasury bond yield has decreased, and the U.S. dollar index has fallen as a result of this trend.Interest rate expectations for September have reverted to a single-step decline. In spite of this, market volatility stayed comparatively low, as seen by the VIX (S&P 500 volatility index) falling to 15 from a peak of 65 at the beginning of August. The IT sector has seen a strong increase in stocks, leading theNasdaq to retrace to 19,500. However, because worries about volatility are still there, market attitude is still cautious. There’s a greater chance of future volatility because the market’s strength and breadth are still up for debate. Under such circumstances, traders may think about two strategies: using contracts for difference (CFDs) to sell stocks or indexes, or buying defensive assets like gold and government bonds. Bonds are a good investment, but gold provides a more conventional hedge against market volatility. It’s crucial to remember that, with the exception of the US dollar, most assets first experience a decrease during volatility surges. But as markets keep plunging after this first fear, gold usually starts to soar. Between $2,470 and $2,522, gold is presently consolidating, with a possible breakout to the upside. Building permits and the Michigan Consumer Sentiment Index, which are scheduled for release on Friday, August 16, 2024, are two important economic indicators to keep an eye on.