US July PCE Inflation Exceeds Forecasts, Driving Yields Higher
27 August 2026 · Morning
US July Personal Consumption Expenditures (PCE) price index rose 3.7% year-over-year, surpassing the 3.6% market estimate, reigniting hawkish expectations for the Federal Reserve.
This inflation surprise pushed US Treasury yields higher, with the 10-year yield climbing 2.6 basis points to 4.649%, and strengthened the dollar.
Despite the inflation data, major US equity indices closed flat, as investors awaited Nvidia's earnings, which saw the stock dip in after-hours trading.
Meanwhile, escalating trade tensions between the US and Canada, alongside weakness in commodities like gold and copper, added to market complexities.
Emerging markets faced pressure today as Brazil's public debt outlook shifted, with Selic-linked bonds projected to account for up to 53% of outstanding debt by 2026.
Global Markets
Detail
S&P 500
Closed at 7,675.70, showing minimal movement despite inflation data.
-0.02%
Nasdaq
Ended the session at 26,130.19, reflecting investor caution.
-0.08%
STOXX 600
European benchmark closed at 656.42, largely flat.
-0.01%
Nikkei 225
Japanese index rose to 66,261.94, closing before US inflation data.
+0.62%
CSI 300
Chinese index gained to 4,590.79, not yet reflecting US market shifts.
+0.85%
KOSPI
Korean index climbed to 6,808.21, closing before US inflation data.
+0.97%
Hang Seng
Hong Kong index increased to 25,652.97, closing before US market reaction.
+0.56%
Dollar Index (DXY)
Strengthened to 99.15 following higher-than-expected US inflation.
+0.25%
USD/JPY
Traded at 159.26, showing slight depreciation of the dollar against the yen.
-0.02%
EUR/USD
Fell to 1.16, as the dollar gained broadly.
-0.03%
USD/KRW
Korean won weakened against the dollar, trading at 1,385.01.
+0.20%
USD/CNY
Chinese yuan showed slight depreciation against the dollar, at 6.72.
+0.03%
US 10-year Yield
Rose to 4.649% after the higher-than-expected PCE inflation report.
+2.6bp
US 2-year Yield
Increased to 4.209%, reflecting renewed hawkish sentiment.
+3.3bp
Japan 10-year Yield
Declined to 2.885%, moving against the global trend.
-0.9bp
Germany 10-year Yield
European benchmark yield climbed to 3.238%, mirroring US bond market reaction.
+5.8bp
Korea 10-year Yield
Fell to 4.272%, likely influenced by local factors before US data impact.
-7.0bp
US HY Spread
High-yield credit spread widened slightly to 270bp.
+1.0bp
WTI Crude
Fell to $82.23 per barrel, continuing a downward trend.
-0.16%
Gold
Declined to $4,591.61, pressured by a stronger dollar and rising yields.
-1.42%
Copper
Fell to $6.60, indicating broad weakness in commodities.
-1.71%
VIX
Volatility index decreased to 15.22, suggesting limited market anxiety.
-1.55%
United States
July PCE Inflation Exceeds Expectations+3.7% YoY
The Personal Consumption Expenditures (PCE) price index rose 3.7% year-over-year in July, surpassing the 3.6% market forecast.
Core PCE also increased by 3.6%, above the 3.4% estimate, signaling persistent inflationary pressures.
Monthly PCE climbed 0.2% (vs 0.1% est), reversing June's decline and reinforcing expectations for further Fed tightening.
Q2 GDP Growth Unchanged, Consumer Spending Revised UpGDP +1.5%
The second-quarter GDP growth was confirmed at 1.5%, with no change from previous estimates.
However, personal consumption growth for Q2 was revised upwards to 3.4% from 3.2%, indicating robust consumer activity.
The Q2 GDP deflator and PCE price index were also revised higher, suggesting inflation is broadening alongside economic growth.
Wall Street Flat, Nvidia (NVDA) Dips After HoursNVDA -1.2%
Major US indices, including the S&P 500 (-0.02%), Nasdaq (-0.08%), and Dow (-0.25%), closed largely flat.
Nvidia (NVDA) fell 1.2% in after-hours trading despite providing stronger-than-expected Q3 revenue guidance of $10.8 billion.
Investors expressed skepticism about the company's long-term dominance and sustainable growth in the AI chip market.
Trump Renews Trade Warnings to CanadaCAD/USD -0.4%
Former President Trump reiterated strong trade warnings against Canada in an interview, intensifying the dispute after recent US-Canada negotiations failed.
The Canadian dollar (CAD/USD) fell to a one-week low of 1.3892, reflecting increased uncertainty over trade relations.
This trade friction adds pressure on Canadian exports, investment, and business confidence, exacerbated by a stronger US dollar.
Executive Order Bans Foreign Power Grid EquipmentNational Security
The White House issued an executive order prohibiting the use of foreign-made large power grid equipment, citing national security concerns related to Chinese technology.
This move aligns with similar decisions by the European Commission, signaling deepening US-China tensions in critical technology and infrastructure sectors.
A $70 billion auction of 5-year Treasury notes saw robust demand, with a bid-to-cover ratio of 2.37 times.
This indicates stable demand for government debt despite rising yields due to higher inflation and ongoing discussions about potential Fed tapering.
Dollar Strength Impacts Emerging MarketsLatAm -0.1%
The strengthening US dollar, driven by higher inflation and Fed rate hike expectations, led to weakness in emerging market assets.
The MSCI Latin America index fell 0.1%, and regional currencies declined by 0.2%, reflecting the broad impact of dollar appreciation.
Senator Blumenthal Expects Russia Sanctions Bill PassageBipartisan Support
Senator Richard Blumenthal expressed confidence that a comprehensive Russia sanctions bill, already passed by the Senate, will pass the House in September.
He emphasized strong bipartisan support for the measure, reiterating a firm stance in support of Ukraine during a meeting with President Zelenskiy.
NVIDIA (NVDA)Q2 Rev +106% YoY
Reported Q2 revenue of $96.2 billion, exceeding consensus of $92.2 billion, with adjusted EPS of $2.22 against $2.10 estimates. Data center revenue surged 117% year-over-year to $89 billion.
Announced a large-scale GPU supply deal with AWS, including 100,000 units for the U.S. government and an additional 2 million for 2027-2028.
Q3 revenue guidance of $108 billion surpassed expectations, but gross margin is projected to slightly decrease to 74% from 75% in Q2.
Meta Platforms (META)Settlement $16.68B
Agreed to a settlement of up to $16.68 billion with multiple U.S. states regarding lawsuits over addictive social media design for minors.
Will allocate $18 billion over 10 years for youth safety programs and record $10 billion in legal expenses in Q3.
New default safety features for users under 18 include a 2-hour daily usage cap, a midnight-6 AM block, and hidden like counts.
Micron Technology (MU)Leadership Change
Announced a significant leadership reshuffle, with Sumit Sadana transitioning to Senior Advisor to the CEO.
Manish Bhatia was appointed President and Chief Operating Officer, while Scott DeBoer became President and Chief Technology Officer.
Apple (AAPL)Event Sep 9
Confirmed a new product launch event for September 9, fueling expectations for new iPhone models.
Anticipation is high for the potential unveiling of a foldable iPhone, which could drive higher average selling prices and margin growth.
Abbott Laboratories (ABT)FDA Approval
Received U.S. FDA marketing approval for 'Libre Duo 10Day,' the world's first wearable device to simultaneously measure glucose and ketones.
The company plans to launch the device in the U.S. market later this year, enhancing its diabetes care portfolio.
Merck (MRK) / Moderna (MRNA)Cancer Vaccine Trial
Interim clinical trial results for their co-developed cancer vaccine showed a reduction in melanoma recurrence risk.
This positive development could advance the vaccine's path through further clinical stages.
Eli Lilly (LLY)Zepbound Study
A field study demonstrated that its weight-loss drug, Zepbound, provided medical cost-saving benefits for obese adults aged 55 and older.
Marvell Technology (MRVL)Analyst Re-eval
Citi analysts re-evaluated the company's business value, reflecting increased confidence in its future prospects.
Lockheed Martin (LMT)Peru F-16 Deal
Proposed an industrial cooperation package worth $1.8 billion to Peru for the acquisition of F-16 Block 70 fighter jets.
GE Vernova (GEV)JV with LS Electric
Established a joint venture with South Korean firm LS Electric to develop and supply Voltage Source Converter (VSC)-based High Voltage Direct Current (HVDC) transmission technology.
Alphabet (GOOGL)Waymo in Munich
Its self-driving subsidiary, Waymo, began test operations in Munich, Germany, targeting commercialization in Europe by late 2027.
Google Cloud introduced a pay-as-you-go option for Gemini Enterprise, offering flexible pricing alongside existing prepaid plans.
Tesla (TSLA)No EU Recall
The Dutch road safety authority (RDW) confirmed there are no plans for a recall in Europe regarding emergency door opening concerns.
This contrasts with a large-scale recall of 4.3 million vehicles in China for similar issues.
Amazon (AMZN)AWS Acquires DuckLabs
Amazon Web Services (AWS) acquired DuckLabs, an Amsterdam-based company that developed the open-source analytical database DuckDB.
Amazon also anticipates faster growth in Canadian package deliveries compared to the U.S. in the coming years.
Palo Alto Networks (PANW)Acquisition Talks
Reports indicate the company is exploring potential acquisitions of cloud monitoring platform Datadog and identity and access management solution Okta.
T-Mobile (TMUS)Patent Win
Won a patent infringement lawsuit against Taiwanese electronics company Asus, with a Texas federal jury invalidating all three asserted patents.
Netflix (NFLX)IATSE Agreement
Reached its first wage and working conditions agreement with IATSE Local 514, a union representing film production and stage workers in the U.S.
JPMorgan Chase (JPM)India Ban
India's Securities and Exchange Board (SEBI) imposed regulatory action on JPMorgan's Indian subsidiary, banning it from options trading.
The action stems from allegations of price manipulation in the options market, reflecting India's tightening derivatives market regulations.
Japan
US-Japan Joint Yen Intervention Signals RevaluationYen Revaluation
A joint US-Japan intervention in the foreign exchange market, the first since 1998 and the first US Treasury-involved intervention since 2011, is seen as a turning point.
Stephen Jen, CEO of Eurizon SLJ, suggests this intervention signals a significant upward revaluation of the yen over the coming years.
This move aims to reshape expectations for the yen's trajectory in global currency markets.
Japan Strengthens Energy Supply Chain ResilienceHormuz Bypass
Japan's government announced a comprehensive plan to enhance energy supply chain resilience, directed by the Prime Minister's 'Green Transformation (GX) Executive Committee'.
The plan includes support for pipeline projects that bypass the Strait of Hormuz, a critical chokepoint for nearly all of Japan's crude oil imports.
This initiative aims to hedge against geopolitical risks and ensure stable energy supplies, with legislative measures to be finalized by year-end.
Latin America
Brazil's Interest-Rate-Linked Debt Share Rises49-53% by YE
Brazil's forecast for the share of interest-rate-linked government debt is raised to 49-53% by year-end, up from previous estimates of 46-50%.
This increase in floating-rate debt exposes the country to greater interest rate shocks, despite the central bank's rate cuts since March.
Federal debt reached 9.289 trillion reais ($1.8 trillion) in July, a 0.22% increase from the previous month.
Latin American Markets Under PressureStocks -0.4%
Latin American stock indices fell 0.4%, and currencies depreciated by 0.2%, pressured by a stronger US dollar and weaker commodity prices.
Rising US inflation data and increased expectations for Fed rate hikes contributed to broader dollar strength, impacting regional assets.
Bolsonaro Proposes Debt CeilingFiscal Discipline
Presidential candidate Flavio Bolsonaro pledged to introduce a debt ceiling if elected, as announced by his economic advisor Adolfo Sachsida.
The proposal aims to strengthen fiscal sustainability by automatically constraining spending when limits are exceeded.
Brazil Stock Outlook Revised DownMomentum Slows
A Reuters poll revised down the outlook for Brazilian stocks, citing fiscal concerns.
While the Ibovespa is projected to rise 8.3% this year and maintain gains into 2026, additional upward momentum is expected to slow.
Brazil Mid-August Inflation Turns NegativeIPCA-15 -0.40%
Brazil's mid-August IPCA-15 consumer price index recorded a monthly decline of 0.40%, marking the first negative reading in a year.
The 12-month rate fell to 4.24% from 4.52% in July, also coming in below the Reuters poll estimate of 4.34%, signaling some inflation easing.
Mexico Growth Forecast2026: +1.5%
Mexico's central bank (Banxico) raised its 2026 economic growth forecast to 1.5% from 1.1%, citing stronger-than-anticipated economic activity in the second quarter.
The forecast for 2027 growth was slightly lowered to 2.0% from 2.1%.
Mexico Inflation TargetQ4 2027
Banxico pushed back its forecast for consumer price inflation to converge to the 3% target by six months, now expecting it in Q4 2027 instead of Q2 2027.
The forecast for average annual core inflation in Q4 2026 was raised to 3.5% from 3.4%, indicating persistent core inflation.
Mexico Monetary PolicyData-Dependent
Banxico Governor Rodriguez emphasized a data-dependent approach, stating that maintaining the current monetary policy rate is not predetermined.
The future level of the policy rate will depend on the central bank's assessment of the inflation outlook, allowing for flexibility to adjust policy direction.
Mexico Economic RisksMixed Outlook
The balance of risks for economic growth is skewed to the downside, attributed to continued economic weakness and uncertainty surrounding the annual USMCA review process.
Inflation risks remain skewed to the upside, driven by persistent core inflation, trade disruptions, geopolitical tensions, climate shocks, cost pressures, and potential peso depreciation.
Colombia Inflation TargetMid-2028
Colombia's central bank anticipates inflation will approach its 3% target by mid-2028.
The technical team's forecast for inflation at the end of 2027 was raised to 4.3% from an earlier estimate of 3.7% in early August.
Emerging Markets
Australia Inflation Exceeds ForecastsRBA Hike Likely
Australia's monthly inflation data surpassed expectations, significantly increasing market anticipation for a Reserve Bank of Australia (RBA) rate hike by year-end.
Local banks have raised their RBA policy rate hike projections to 15-23 basis points by year-end, with a 20 basis point increase being a conservative estimate.
The RBA's November meeting, coinciding with the release of Q3 CPI data, is considered the most probable timing for an interest rate increase.
Australian Dollar Reaches Multi-Month HighAUD/USD 0.7186
The Australian dollar (AUD/USD) spot rate reached 0.7186, hitting a multi-month high.
A break above 0.7200 could expose the year-start high of 0.7277, indicating strong upward momentum.
The AUD/NZD cross also formed support near 1.1900, suggesting relative strength against the New Zealand dollar.
Brazil Public DebtShifting Mix
Brazil's Treasury raised its forecast for Selic-rate-linked debt to 49-53% of outstanding public debt by 2026, up from a previous 46-50%.
Fixed-rate bonds are now projected at 20-24% (previously 21-25%), inflation-linked at 21-25% (previously 23-27%), and FX-linked at 3-7% (unchanged).
An adviser to Flavio Bolsonaro stated a public debt ceiling would be introduced if he is elected president.
Russia Grain Exports4-Month Delay
Repairs to the Novorossiysk NKHP grain terminal, damaged by a Ukrainian drone attack on August 12, are expected to take up to four months.
This disruption affects a crucial corridor responsible for 70% of Russia's grain exports via Black Sea and Azov Sea ports, which have seen attacks intensify in recent months.
An adjacent terminal operated by Demetra also sustained minor damage.
Russia Industrial Output+0.4% YoY
Russia's industrial production rose 0.4% year-on-year in July, rebounding from -0.7% in June but falling short of Reuters' poll forecast of +0.7%.
Raw material extraction worsened to -2.6%, and manufacturing continued to struggle.
Cumulative industrial output for January-July stood at +0.1%, significantly below the annual target of +0.6%.
Ukraine Eastern DefenseNATO Tactics
President Zelensky appointed two commanders, from the Azov Regiment and the 3rd Army Corps, to lead defenses in eastern strongholds.
These commanders are experienced in NATO-style tactics, strengthening Ukraine's defensive capabilities.
The move comes as Russia demands a complete withdrawal from the Donetsk region.
Turkey on SyriaSDF Dissolution
Turkey's AK Party welcomed the dissolution of the Syrian Democratic Forces (SDF) as a significant step toward strengthening Syrian unity.
Turkey has emerged as a key ally in rebuilding the next Syrian government following the collapse of Bashar al-Assad's regime.
Czech Fiscal RulesRelaxed
The Czech parliament overrode a presidential veto, giving final approval to a bill relaxing budget deficit rules.
The populist Babiš government, holding a majority in parliament, pushed through the legislation.
This move provides the government with greater flexibility for policy implementation by easing fiscal constraints.
Iran-Oman AgreementHormuz Rights
Iran's Revolutionary Guards announced an agreement with Oman on sharing rights and revenues in the Strait of Hormuz.
Iran claims the United States is obstructing these negotiations.
Markets & Commodities
Brent Oil Declines, Calming Bond MarketsBrent 3-day Fall
Brent crude futures continued their three-day decline, easing market sentiment despite no actual improvement in Washington-Tehran relations.
The fall in oil prices provided a stabilizing mechanism for volatile global bond markets.
Investors are also closely watching Nvidia's earnings to assess the health of the AI ecosystem.
Europe
Eurozone MarketsMuted Close
The STOXX 600 index closed muted, with bank stocks leading gains and healthcare shares weakening.
US July inflation at 3.7% met expectations, slightly increasing expectations for a September Fed rate hike, pushing Eurozone 10-year yields up by 2 basis points.
The ECB is preparing for a September rate hike but showing limited signals for further increases, aiming to mitigate potential oil price side effects from the Iran conflict.
Germany Growth Target>1% by 2027
Chancellor Friedrich Merz set a target of over 1% growth by 2027, driven by pro-business reforms and increased government spending.
Finance Minister Lars Klingbeil plans to allocate €50 billion of a €500 billion special wartime budget within one year.
R&D investment is slated to increase by 60% by 2027 compared to 2026 levels.
Swiss Banking CapitalUBS Rules
Swiss National Bank Vice Chairman Antoine Martin supported proposals for tougher capital requirements for UBS.
This comes after UBS's acquisition of Credit Suisse, which increased banking concentration in Switzerland.
Martin emphasized that maintaining a robust level of capital is not a commercial disadvantage for banks.
Germany-UniCredit TalksMeeting Set
German Finance Minister Klingbeil invited UniCredit CEO Andrea Orcel to a meeting at the Ministry of Finance in Berlin on September 14.
This marks the first direct contact between the two, signaling a potential reopening of negotiations regarding Commerzbank.
Iceland EU Referendum51.3% Support
A referendum on resuming EU accession talks is scheduled for August 29 in Iceland.
A poll conducted from August 21-25 among 1,019 people showed 51.3% support for resuming talks, a slight decrease from previous surveys.
The vote is specifically on restarting negotiations, not on full EU membership, which would require a separate referendum after talks conclude.
China
China Labor Culture996 Backlash
Chinese workers expressed dissatisfaction on social media with the '996' work culture (9 AM to 9 PM, six days a week), citing overwork.
The EU's stance on forced labor and excessive working hours resonated online in China, potentially forming a public opinion basis for trade negotiations.
The deepening EU-China trade deficit and China's price competitiveness, often based on low wages and long hours, are contributing to increased tensions.
CNOOC (0883.HK)+23.4% Profit
CNOOC reported a record interim net profit of 85.8 billion yuan ($12.9 billion), a 23.4% increase from 69.5 billion yuan in the previous year.
Oil and gas revenue rose 20% to 206.1 billion yuan, driven by a 23.6% increase in the average realized oil price to $85.49 per barrel.
The profit surge was attributed to rising Middle East oil prices due to the military situation in Iran and increased production output.