US Core CPI rises on services
Underlying inflation accelerated in July in the US at the strongest monthly pace since the start of the year
- Core CPI (excluding more volatile food and energy) for July increased by 0.3% from June (in line with expectations) and by 3.1% year-on-year (+3.0% expected)
- The pickup in core CPI was driven by service prices as these climbed the most since the start of the year – especially airfares, medical care and recreational activities
- Goods prices rose at a softer pace, even those categories more exposed to tariffs such as toys, sporting goods and household furnishings
- Money markets are pricing in about a 97% chance of a Fed cut next month, with two-year yields dropping to 3.75% – inflation reading eases some concerning that new tariffs might have lasting effects on inflation
US & China – 90 more days of truce
President Trump announced a pause of higher tariffs on Chinese goods for another 90 days in an attempt to stabilize trade ties and avoid further escalations
- The order extends the truce until the 10th of November with all elements of the previous agreement remaining in place – US tariffs on Chinese goods will continue at 30%, Chinese tariffs on US goods at 10% with China also maintaining with its rare earths exports
- Without the truce US tariffs on Chinese goods would have jumped to at least 54%
- The extension helps ease worries of new tariff escalation and gives time for both countries to discuss the various unresolved issues such as fentanyl trafficking, Chinese purchases of Russian and Iranian oil and the disagreements on US business operations in China
Nvidia chip orders halted again
Weeks after a Trump-approved deal to sell H20 AI chips in China, Beijing’s cyberspace regulator ordered ByteDance, Alibaba, Tencent and others to halt new Nvidia chip purchases over data security concerns
- The Cyberspace Administration of China is investigating potential “backdoors” and risks tied to U.S. legislation requiring location trackers in chips; Nvidia denies any hidden access
- The move aligns with China’s push to replace foreign tech with domestic chips, such as Huawei’s, and threatens Nvidia’s position in its No. 2 market
- Big Chinese firms had recently ordered 700,000 H20 chips after the U.S. lifted a ban; still unclear if it applies to these shipments
- Nvidia is also offering China-specific Blackwell chips, less powerful than H20, while awaiting U.S. approval to sell a higher-performance version
Lower weight loss than expected
Eli Lilly & Co. tumbled as disappointing data on its new weight-loss pill overshadowed strong growth from the company’s current obesity medicine, which helped drive it to raise its yearly profit and sales outlook
- Lilly’s results from an obesity pill study didn’t perform as well as Wall Street expected. It resulted in lower weight loss and higher rates of nausea and vomiting than anticipated, side effects associated with so-called GLP-1 drugs
- The data was a boon for rival Novo Nordisk. In Lilly’s pill study, patients on the highest dose shed roughly 11% of their body weight. In late-stage trials, patients on Novo’s injectable Wegovy lost about 15% of their weight over a 68-week period
- As a result, Eli Lilly’s shares fell by almost 17% in two days, while Novo Nordisk’s shares rose by more than 11% over the same period, helping the latter to recover some of its relative underperformance.
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