Last week, headlines were dominated by President Trump’s threat to bomb Oman amid the US–Iran dispute. Locally, July inflation and retail data pointed to easing price pressures and softer consumer demand.
International Market Developments
Last week, financial markets were unsettled as the Federal Reserve’s June meeting minutes reinforced its cautious stance and highlighted persistent inflation risks. Although policymakers kept rates unchanged at the July meeting, they pointed to upside pressures from tariffs, AI-related investment and tensions in the Middle East. Meanwhile, Treasury officials responded to surging yields by expanding long-duration bond buybacks after the 30-year yield reached its highest level since 2007. The move came as US public debt crossed the $40 trillion mark.
Geopolitical risks added to market uncertainty. President Trump rejected an extension of the US–Iran truce and threatened to bomb Oman if it interfered with Washington’s talks with Tehran. Tensions also escalated in the Strait of Hormuz, where a vessel was struck by an unidentified projectile. Elsewhere, talks between the US and Canada broke down, leading to a war of words between the parties and threats of reciprocal tariffs.
Looking ahead, markets will be shaped by the upcoming PCE inflation data and developments at the Jackson Hole Economic Policy Symposium.
Local Market Developments
Last week, July CPI data showed that fuel-related second-order effects remained limited, with headline inflation easing to 4.3% year on year from 5.0% in June. The downside surprise was driven mainly by food and non-alcoholic beverages; lower municipal tariff increases and a decline in fuel prices. More broadly, the figures suggest that the earlier surge in fuel costs has not materially broadened price pressures across the economy.
In the retail sector, June sales volumes fell by 0.6% month on month after remaining flat in May, while annual growth slowed to 1.6%. Wholesale trade weakened further, contracting by 3.4% month on month and 6.8% year on year, extending the declines recorded in previous periods.
Looking ahead, July PPI data and the National Treasury’s July main budget data will keep inflation and fiscal developments in focus.