The U.S. gas prices declined by 20% this month, encouraging consumers and improving their sentiments.
After releasing a better-than-expected CPI report, Wall Street stocks in the United States rose for the third day in a row. Today, Routers reports noted that the U.S consumer’s sentiment jumped higher than expected in August.
According to the White House, the major factors in such a jump were strong hiring conditions, wage increases, and shrinking inflation. The S&P rose today by 0.96%, the Nasdaq index increased by 1.37%, and the Dow Jones average industrial gained 0.72%.
Experts forecast that consumer sentiment will reach 52.5 in August, but the University of Michigan study has delivered positive results. According to the experts at the University of Michigan, August’s consumer sentiment was at 51.5, a full 1 lower than the previous prediction.
In the two past weeks, crucial reports were released, delivering a good outlook for a stringent and healthy economy. The July job report exceeded all expectations, coming in at more than double the initial forecast. The U.S. inflation rate declined from 9.1% to 8.5%, and it’s expected to shrink to 5% in the next 6 months.
As for the bond market, the released data by Morningstar Direct suggests that the higher yield bonds received a total of $6.8 billion in July. Experts believe that investors might, from now on, treat high-yield bonds as risky assets. Recent data shows that U.S. renters have seen sharp increases in their rents due to high-yield bonds that caused increases in interest, loans, and mortgage rates. Today the U.S 10-year bond has fallen by 1.35% to 2.8490, which is counted as a positive sign for a future outlook.
In the energy and gas markets, gas prices in the United States have fallen by 20% this month. Posting a decline from a $5 high per gallon to a $4 low per gallon in some states. Crude oil declined to $89 per barrel. The oil-producing conditions had improved compared to the past 6 weeks due to the implemented sanctions against Russia and its oil supplies.
Yet, the European stock market is another subject. The inflationary pressures are still affecting the consumer’s ability to buy food and gas.
In the U.S., the Federal Reserve chairman noted that the Fed remains committed to its goal of bringing inflation back to less than 3%. Experts debated this plan since it’s almost impossible to shrink inflation from a 9.1% high to a 3% low.
The U.S. economy is in better shape than June and Mai’s, but the rising tension between China and the U.S. might affect these short-term gains. Three major Chinese companies announced today that they will withdraw from the US stock exchange market.
The given reason is the growing financial separation and tension between China and the U.S.
It’s too early to determine the long-term effect of the financial separation between the two biggest economical forces in the world but at this time this kind of tension will cause a short-term recession.