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Investors started the week trading with a more subdued tone, with sentiment soured by data showing a slowdown in China in Q2 and by lingering inflationary concerns on the back of upside tensions in some agricultural prices.

Investors closed the week extending their appetite for risk, albeit consolidating and taking profits after the rebound recorded across asset classes in the previous sessions. Sentiment was also lifted by a positive start of the Q2 corporate earnings seasons, with better-than-expected results for the reporting large US banks.

In yesterday's session, investors continued to digest the lower-than-expected US inflation report for June and traded with a risk-on mood. In addition, US PPI data for June reinforced the disinflationary environment while St. Louis Fed President James Bullard, one of the most hawkish FOMC member in this cycle, announced his resignation.

A lower-than-expected reading of June’s US inflation led investors to project a lower path for the Federal Reserve’s interest rates. Concretely, headline and core inflation fell by 1pp and 0.5pp to 3.0% y/y and 4.8% y/y, respectively.

Investors traded in a subdued mood on Tuesday, as they awaited today’s US CPI report and digested the latest dovish comments from several Fed officials on Monday: Bostic, who said that inflation could be brought back to target without further rate hikes; and Daly, who said the Fed was approaching «the last part» of its hiking cycle.

Investors started the week trading with a cautious mood, still digesting the mixed US employment report released on Friday and awaiting tomorrow's key CPI inflation data. Also, comments from San Francisco Federal Reserve President Mary Daly pointed to further interest rate increases even if signaling the end of the hiking cycle is nearing.

In the last session of the week, a mixed US labor market report left investors trading cautiously. While the pace of job creation eased to the lowest reading in 30 months in June (209k) and the previous two months were revised lower, wage increases remained elevated (4.4% y/y) and the unemployment rate ticked down to 3.6%.

In yesterday’s session, investor sentiment was soured by data showing the resilience of the US economy and its labour market. Private surveys showed that US companies added the most jobs in over a year in June, and the services sector expanded faster than expected, which investors fear will allow the Fed to continue raising rates.

The minutes of the Fed's June meeting showed that the decision to hold interest rates steady in June was not unanimous, and that most officials expected further rate hikes would be necessary, as the dot plot had shown. Also yesterday, US factory orders data for May came in below expectations, but still showed growth.

Trading in global markets was subdued on Tuesday as US markets were closed due to a domestic holiday and there was little in the way of data releases to guide investors. The most notable of these was German exports, which fell -0.1% m/m in May, missing analysts’ expectations of a 0.3% rise.

Investors started the week trading cautiously. Weak manufacturing sector surveys pointed to a cooling yet resilient economy but were not enough to completely dampen investors’ risk appetite.

Investors ended the week on a brighter note than on Thursday. Market sentiment was boosted by encouraging data on inflation dynamics in the US and in the eurozone (despite a modest tick up in core inflation).