Geopolitical Risks Muddy the Economic Picture
Geopolitical risks dominated headlines last week with the increasing escalation over North Korea’s nuclear weapons program stealing most of the spotlight. The war of words that has been simmering between the U.S. and North Korea bubbled over into markets. After making new highs, the S&P 500 fell 2% late in the week, marking the first significant sell off in several months.
Last week’s economic data, particularly U.S. consumer price inflation, disappointed with prices only increasing 0.1% versus an expectation of 0.2%. The stubbornly low inflation readings will continue to add uncertainty to future monetary policy decision making. The minutes from the July Federal Reserve meeting are scheduled to be released on Wednesday.
This week has several key pieces of economic data that will provide a good indication of economic growth in July. July retail sales, housing starts and industrial production, along with manufacturing activity reports from Philadelphia and New York will provide markets with plenty of new information.
It has always been difficult to trade amid geopolitical uncertainty. Stay nimble as markets may experience more volatility.
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