Weekly Financial Market Review and Analysis: July 15th - July 19th

Last week, global financial markets experienced significant turbulence. Early in the week, the unexpected outcome of the French elections brought relief to the eurozone. This was followed by Federal Reserve Chairman Jerome Powell's two-day testimony on Capitol Hill, where his dovish remarks provided a strong boost to the market. On Thursday, the US CPI inflation data unexpectedly cooled, and Japan seized the moment of volatility, causing the yen to surge by over 400 points. On Friday, a series of data from China heightened expectations for the upcoming mid-week Central Committee meeting.

Market Performance

Global stock markets continuously refreshed historic highs, with chip stocks rising over 2% and Chinese concept stocks climbing more than 4% for the week. The Dow Jones rebounded by 1.6%, the S&P 500 rose by 0.9%, the Nasdaq jumped by 0.3%, and the Russell 2000 index soared by 5.5%. The Chinese stock market halted its seven-week losing streak.

The US dollar continued to slump for the second consecutive week, with the yen skyrocketing nearly 300 points and the Chinese yuan gaining nearly 200 points. Gold extended its rally for the third week. Oil prices fell on Friday, ending a four-week winning streak. Bitcoin, after a sharp drop earlier in the week, struggled to break through the 60,000 mark amid ongoing fluctuations.

Bond Yields and Currency Movements

US Treasury yields fell sharply, with the 10-year yield declining by nearly 10 basis points. The dollar was heavily pressured, with the dollar index accelerating its decline from near the 105 level to reach 104.04 before the weekend. As the dollar plummeted, non-dollar currencies received a substantial boost, notably the yen, which surged over 400 points on Thursday, distancing itself from the 160 level, while the yuan also strengthened.

Gold and Silver

Gold took advantage of the situation, breaking through the critical 2400 level and peaking at 2424 dollars, with a daily increase of over 40 dollars, or 1.86%. Silver prices fell from a six-week high of 31.750 dollars to around 30.395 dollars. Silver interrupted its three-week winning streak, attracting some selling pressure around the 31.000 dollar level. With the slight rebound of the dollar, silver's gains narrowed.

Stock Market and Federal Reserve Expectations

The anticipation of the Federal Reserve potentially starting a rate-cutting cycle in September has awakened the stock market from its slumber for most of the year. Over the past week, US CPI inflation data undoubtedly pushed the global market celebration to a peak, reinforcing the expectation of a central bank rate cut, leading global stock markets to continuously hit new highs (except for China). Before the weekend, all three major indices rose. The Dow Jones Industrial Average closed above 40,000 points for only the second time in history. Investors were digesting the impact of major bank earnings reports and inflation data. The S&P 500 rose 0.55% to close at 5615.35, the Nasdaq Composite Index gained 0.63% to 18398.44, and the Dow Jones Industrial Average increased 0.62% to 40000.9, up 1.6% for the week, leading other indices.

Bond Market

The bond market was one of Wall Street's strongest performers last week. Following the latest inflation data, US Treasury yields experienced significant fluctuations. The 10-year Treasury yield rose 3.5 basis points to 4.227%, higher than the pre-data release level of 4.204%. The 2-year Treasury yield slightly increased to 4.510% from 4.495% before the report. After initial volatility, Treasury yields stabilized and remained at lower levels through late Thursday.

Crude Oil

Investors weighed weak US consumer confidence against growing hopes for a Fed rate cut in September, leading to a decline in international oil prices, ending a four-week upward trend. WTI crude oil retreated after four consecutive weeks of gains, falling 1.43% for the week to close at 82.26 dollars, a reasonable performance. Brent crude oil futures fell 0.37 dollars per barrel, or 0.4%, to close at 85.03 dollars per barrel, with a cumulative decline of 1.7%.

Cryptocurrency

A week ago, the price of the world's largest cryptocurrency fell to its lowest level since February, prompting bargain hunters to return in force. After Bitcoin's price dropped below 54,000 dollars on July 5th, reaching its lowest level since February, there was a new wave of ETF inflows. Before the weekend, Bitcoin prices hovered around 58,000 dollars, up more than 8% from the July 5th low.

Overall, last week’s market activities were driven by major economic data releases, central bank policies, and geopolitical events, with significant movements in currencies, commodities, and cryptocurrencies reflecting the dynamic nature of global financial markets.

Important Events and Economic Data Overview: (Beijing Time)

Important Events:

Monday (July 15):

- 20th Third Plenary Session of the CPC Central Committee (July 15-18)

**Tuesday (July 16):**

- Federal Reserve Chairman Jerome Powell's conversation with David Rubenstein, Co-Executive Chairman of The Carlyle Group

**Thursday (July 18):**

- Federal Reserve's Beige Book release on economic conditions

- European Central Bank (ECB) interest rate decision

- ECB President Christine Lagarde holds a monetary policy press conference

**Friday (July 19):**

- FOMC permanent voting member and New York Fed President John Williams speaks on monetary policy

#### Economic Data Overview:

**Monday (July 15):**

- Eurozone June total reserve assets (billion euros)

- US July New York Fed Manufacturing Index

- US June ISM Manufacturing PMI

- US June New York Fed 1-year inflation expectations (%)

**Tuesday (July 16):**

- Australia ANZ-Roy Morgan Consumer Confidence Index (week ending July 14)

- Eurozone July ZEW Economic Sentiment Index

- US June retail sales month/year rate (%)

- Canada June unadjusted CPI month/year rate (%)

**Wednesday (July 17):**

- UK June CPI year rate (%)

- UK June Retail Price Index year rate (%)

- UK June unadjusted Input PPI year rate (%)

- Eurozone June harmonized CPI year rate - unadjusted final value (%)

- US June industrial production month rate (%)

- US June new housing starts annual total (10,000 units)

**Thursday (July 18):**

- Australia June seasonally adjusted unemployment rate (%)

- Australia June employment change (10,000 persons)

- UK May unemployment rate - ILO standards (%)

- European Central Bank (ECB) interest rate decision

- US continuing jobless claims for the week ending July 13 (10,000 persons)

- US July Philadelphia Fed Manufacturing Index

**Friday (July 19):**

- UK July Gfk Consumer Confidence Index

- Japan June national CPI year rate (%)

- UK June seasonally adjusted retail sales month rate (%)

- Canada May retail sales month rate (%)