Today
Stocks and bonds are moving higher this morning after July U.S. inflation came in line with expectations, easing concerns that the Fed will need to raise interest rates in the near term. Headline CPI rose 0.1% in July and 3.4% from a year earlier, while core inflation increased 0.2% on the month and 2.5% annually, matching its slowest pace hit earlier this year and in March 2021. Combined with last week’s weak employment report, the data helped markets reduce expectations for a September rate hike, sending Treasury yields lower and supporting equities, particularly tech stocks. Still, oil prices remain elevated as uncertainty continues over negotiations to restore energy flows through the Strait of Hormuz, although strong results from several AI-related companies have provided some additional support to market sentiment.
Small-business optimism in the U.S. rose to its highest level in nearly a year last month, with the NFIB index climbing 2.4 points to 99.8 as eight of its 10 components improved. Businesses became more willing to expand, with the share planning to add workers reaching its highest level since October 2022 and capital spending intentions rising to their strongest since late 2024. Inflation pressures also showed signs of easing, as fewer businesses identified inflation as their biggest concern. The number of businesses raising prices also declined for the first time since February and fewer firms planned future price increases. Despite elevated uncertainty surrounding the Iran war, the report suggests small businesses remain confident that conditions will improve and are continuing to invest and plan for growth.
Money keeps flowing. FactSet’s July U.S. ETF report showed assets under management holding steady at a record US$15.7 trillion, while investors added another $193.2 billion of net inflows despite the S&P 500 slipping 0.1% during the month. Every major asset class attracted new money, with equities accounting for 69% of inflows and fixed income another 27%, while alternatives also continued to see modest demand. Within equities, investors favoured broad U.S., European, and Japanese equity ETFs. Demand for technology and semiconductor funds remained strong, while energy and communication services saw outflows. July also saw 159 new ETF launches, keeping 2026 on pace for another record year, as issuers continued expanding into leveraged single-stock, structured outcome, and income-oriented strategies, reflecting ongoing demand for specialized ETF products.
Household borrowing remained high in the second quarter, with auto loan originations reaching a record of $211 billion, while consumers also increased credit card and home-equity balances. Home-equity borrowing has now been rising for four years, partly as older homeowners tap equity rather than refinance existing mortgages at higher rates. Despite increased borrowing and pressure on inflation-adjusted incomes, household balance sheets remain relatively resilient, with the overall delinquency rate edging down to 4.7% from 4.8% and the pace of new credit-card delinquencies remaining stable. Consumer spending has also stayed healthy, rising 3.2% in Q2, while Bank of America data showed credit-card spending excluding gasoline increased 4.3% in July. Consumers continue to borrow and spend at a solid pace, with little evidence so far that elevated prices and borrowing costs are translating into a broad deterioration in household financial conditions.
The risk of a global food crisis remains contained according to recent reports despite the Iran conflict and a strengthening El Niño, as agricultural markets are starting from a relatively strong supply position. The initial fertilizer shock has eased after China reopened its urea export channel, helping push fertilizer prices below their conflict-driven highs. Better affordability for farmers has also reduced risks to future harvests. Global cereal and oilseed markets have substantial buffers following years of strong harvests, with inventories and stocks-to-use ratios at comfortable levels. While El Niño remains a risk, particularly for crops in Asia and Australia, its effects are likely to be uneven across regions and commodities rather than creating a synchronized global supply shock. While geopolitical and weather risks could create periods of volatility and shortages, large inventories and improved agricultural preparedness make a sustained, broad-based rise in agricultural commodity prices unlikely.
Buyer beware. An Ontario couple pleaded guilty to defrauding 107 people of ~$265,000 through a fake Taylor Swift Eras Tour ticket scheme, highlighting the risks of buying resale tickets from private sellers. Buyers were told their tickets would be available shortly before the November 2024 concerts, but the tickets never existed. Investigators found that the couple used the money for online gambling. Fans are urged to use official ticketing platforms or verified resale exchanges and to watch for red flags like screenshots instead of official digital tickets, unusual payment requests, extreme pricing, and pressure to pay quickly. Paying with a credit card is also recommended as it may provide chargeback protections if tickets are never delivered, instead of using e-transfers, crypto, or gift cards.
Diversion:
At least it doesn’t hurt if you fall.
