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Gasoline in Best Run Since 2013

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Euro-area inflation rises, gasoline surges to more than $2 a gallon, and a busy day for data watchers. Here are some of the things people in markets are talking about today.

Inflation

Consumer prices in the euro area rose 1.5 percent in August, the highest reading in four months and slightly more than the 1.4 percent economists had expected. Unemployment in Germany fell further, with the jobless rate remaining at 5.7 percent, the lowest since reunification. Despite the continuing robust performance of the euro-area economy, expectations remain low for a major policy announcement at next week’s European Central Bank meeting. 

2 bucks a gallon

Gasoline extended its longest surge since 2013 to pass $2 a gallon on the New York Mercantile Exchange as Harvey forces the closure of the Colonial Pipeline, which transports fuel from Texas to the east coast of the U.S. With at least 23 percent of the country’s refining capacity offline in the wake of the storm, investors expect supply to remain tight and are booking tankers to haul European gasoline across the Atlantic to meet demand. Crude prices remain broadly unchanged, with a barrel of West Texas Intermediate for October delivery trading at $46.08 at 5:20 a.m. Eastern Time.

Growth outlook

China’s official manufacturing purchasing managers index rose to 51.7 in August, ahead of expectations, as industrial output defied a broader slowdown in the economy. Economists are warning that debt-fueled growth before the Communist Party congress is unsustainable. One thing that may give the country’s leadership some cause for optimism is the possibility that the yuan, at its highest level in more than a year, is slowly but surely becoming more attractive as an international alternative to the dollar

Markets rise

Equity markets are ending the month on a positive note. Overnight, the MSCI Asia Pacific Index added 0.1 percent, while Japan’s Topix index rallied 0.6 percent as the yen slipped against the dollar. In Europe, the Stoxx 600 Index was 0.6 percent higher at 5:35 a.m. as stocks in the region added to yesterday’s rebound, and S&P 500 futures pointed to a gain at the open. Gold remained over $1,300 an ounce and the U.S. 10-year Treasury yield was at 2.148 percent.

Coming up…

Fed watchers will keep a close eye on the core PCE deflator, the central bank’s favored inflation gauge, when it is published at 8:30 a.m., with expectations for a slowdown to 1.4 percent. Personal income and spending data for July will be published at the same time, with both numbers expected to show continued robust consumer sentiment. Also at 8:30 a.m., weekly initial jobless claims data will give investors one last look at the jobs market ahead of tomorrow’s payrolls report. North of the border, again at 8:30 a.m., second-quarter GDP for Canada is released. 

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