As we discussed, the June low was marked by a central bank moment. And we headed into this big technical level this week, with a central bank moment on the calendar — the July Fed minutes.
This technical level proved to be a powerful one. Stocks traded perfectly into the trendline from the all-time highs (the yellow line), and the 200-day moving average (the purple line) — and the positive momentum failed.
But as we also discussed earlier in the week, the big central bank moment is next week.
The Fed Chair, Jerome Powell, will give a prepared speech at Kansas City Fed's economic symposium in Jackson Hole, Wyoming. This event is well attended by the world's most powerful central bankers and finance officials, and has a history of signaling policy adjustments.
To this point, the biggest central banks in the world have been all bark and little bite.
Inflation hit double digits in the UK this week. And yet the Bank of England has rates set at just 1.75%.
In Germany, July producer prices jumped 37% from a year ago. This is the economic engine of the euro zone.
Where are rates? Remember, they surprised markets with a 50 basis point hike (market was expecting a quarter point). That took the benchmark short-term lending rate in Europe to a whopping zero percent. They had negative interest rates before that move, despite record inflation.
Here's a look at the German PPI chart …