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Inflation eases in August

Domestically, inflation appeared to ease in August, with the Consumer Price Index falling to 2.5% (from 2.6% in July) and the Retail Price Index (which includes housing costs) falling to 2.9% from 3.2%. The lower indices were partly a result of smaller increases in gas prices, and were welcome given the increases seen in July.

The yields on short term Spanish debt dropped at an auction in Madrid today, although the good news wasn’t sufficient to put a stop to the creeping up of yields (and therefore reduction in value) on Spanish 10 year debt. The yield broke above 6% today, up from the low of 5.5% that was reached following Mario Draghi’s bond buying announcement.

Elsewhere, news appeared to be weighted to the downside. More profit taking appeared to be on the cards as markets retracted further form their recent highs, and there seemed little in the way of good news on the horizon that could provide a boost to risk assets. In the near term, several profit warnings throughout the last few months have raised concerns that the impending US third quarter earnings season will show deterioration in corporate health. The latest example was FedEx, the parcel and delivery, whose fiscal first quarter results were slightly better than expected but reduced its guidance for the full year profits on economic weakness.

The FTSE 100 lost 0.4% to 5868, paring losses that had seen it trade below 5840. Once again the defensives sat at the top of the index, whilst miners and banks largely leading the declines. Both European and American oil benchmarks (Brent Crude and WTI, respectively) were lower by more than 3%.

This was posted in Bdaily's Members' News section by James .