Key Points
The prospects for a soft landing got a boost this week, as data showed consumer-price inflation continuing to slow, in line with expectations, even as retail sales saw a surprising surge in July..
Meanwhile, industrial production figures from the Federal Reserve, also released on Thursday, came in weak, showing a 0.6% decline in July from June..
This makes the markets apparent high degree of confidence in the Federal Reserve look odd..
Markets are currently pricing in a 27.5% chance of a half-point cut, which would be bigger than the usual quarter-point move, according to the CME FedWatch tool..
Recent experience shows just how sharp those disruptions can be: It was hawkish rhetoric from the Bank of Japan that prompted a surge in the yen, an unwind in the carry trade and the most volatile week for stocks in years..
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