Other than commodities, markets took a breather Monday in advance of Wednesday's July CPI reading, as investors weigh the odds future actions of the Federal Reserve concerning inflation and what looks to be a stagnant employment market.
While Friday's reading of -23,000 jobs from the monthly BLS Non-farm payroll data sent some chills through the economy, Wall Street took the news as a sign that the Fed would be unable to raise interest rtes at their next FOMC meeting in September. The other side of the coin is that inflation has re-emerged as a threat to the economy, with higher-than-expected CPI readings the past three months.
Though many analysts - including some voting members of the FOMC - attribute the recent rise in inflation to disruptions in supply chains and generally unstable conditions stemming from the conflict in the Middle East, others - including three FOMC board members who voted for a rate hike at the July meeting - believe inflation to be more systemic and a real threat to stability in the United States and elsewhere.
That is where the crux of the arguments lay, and both sides have good points. There's more beneath the surface, however.
When July CPI is released prior to the market open on Wednesday, it may trigger a precious metals event if analysts are correct about the number indicating a cooling of inflation pressure. Silver will go off like a hypersonic missile if the monthly headline number is +0.2 or lower and the annual rate comes in at 3.4% or less, which is highly probable. People will also be watching the core number, expected to come in at 2.5%. Not only would softer inflation figures be a solid for the general economy (Wall Street may see it differently), but potentially lower interest rates (read: money printing) is like putting gold and silver on steroids.
Because precious metals don't return any dividends, they are bought and sold against treasury interest rates. When rates are high, there isn't an urge to buy PMs, but when rates are low and money is easy, they become much more attractive as a hedge against declining purchasing power. The prefect storm which may emerge on Wednesday - and possibly further on Thursday with the PPI release - is a softer read on inflation which would not only send interest rates down, but also appeal to the bullish Wall Street cohort which sees flagging inflation as a road map for the Fed to ease, sending stocks higher. In such a scenario, everybody wins, but the top prize may be taken by gold bugs and silver stackers.
In case anybody needs convincing, the recent rise in precious metals extended into Monday, led by silver, which popped from the mid-63s to above $66 before settling into a range around $64.25-65.50. Gold was less extravagant, though the move from $4,320 to $4,400 during the U.S. session was noticeable.
Metals traders may have been looking forward to Wednesday's inflation reading, or, they may have just been jumping on the moving bandwagon. PMs have been on the move since Monday of last week and the momentum does not appear to be waning in the least. Wednesday might produce a "moon shot" if the CPI comes in below expectations.
Everything other than small caps and crude oil lagged on Monday, with WTI futures rising from $76 to $82 on the day, courtesy of more speculation over the prospects for opening the Strait of Hormuz, something that's become something of a tennis ball affair between neocons and peace negotiators. The narrative swings in different directions on a regular basis and with it the price of oil. Being a global commodity, there are certainly more players than Iran and the U.S.. Everybody seems to want to have a say in how the Middle East and the shipping of oil and other commodities are handled, and by whom.
When the price of oil rises, so too the threat of inflation, though this drama, which started off as "a few days or maybe weeks" has morphed into a five-month long struggle against rational solutions. Every time there appears to be a breakthrough in negotiations, one side or the other (admittedly, it's usually the United States) turns heel and starts lobbing missiles and other munitions around the region. There is no sense to this kind of behavior, but that's what happens when an empire suffers from poor planning and decision-making by people who are genuinely unstable. On top of that, the reality is that the United States has been handed a severe beating by a foe - Iran - that is fighting for its very survival and refuses to back down.
Throwing a political bent into the three-ring circus, the U.S. midterms are less than three months away and both parties need to put their best image forward, but especially the ruling party, the Republicans. If they wish to stave off big losses in the House and Senate, they sorely need to appear to have a positive direction, and high inflation and a seemingly endless conflict in a critical region doesn't seem to cut it. In the best scenario, the U.S. declares victory and brings troops home, inflation slows and the politicians get down to the usual nasty ads, finger-pointing, and general silliness of the elections.
We'll get to see how this all works out in the weeks and months ahead, but Tuesday appears to be a rerun of Monday's indecisive trading.
Approaching the open, stock futures are higher, though only modestly. Gold and silver continue to hold gains.
At the Close, Monday, August 8, 2026:
Dow: 53,975.98, -60.95 (-0.11%)
NASDAQ: 26,605.36, -85.26 (-0.32%)
S&P 500: 7,753.11, -4.53 (-0.06%)
NYSE Composite: 24,667.88, +72.64 (+0.30%)
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