DAX caught between geopolitics and US inflation data
This article was created with the help of artificial intelligence.
Key Takeaways
- The US released its inflation data for the previous month on August 12, 2026, an event that determines interest rate markets worldwide.
- German industrial production rose 0.2% month-on-month in June 2026, driven mainly by stronger automotive production.
- Unprecedented low water levels in German rivers in August 2026 significantly impair the transport of raw materials and goods on waterways.
- German headline inflation rose noticeably in July 2026 following the end of time-limited tax relief on fuels.
- Relative valuation of bonds and equities is complex given geopolitical risks and the interaction between oil prices and interest rate developments.
On Wednesday, August 12, 2026, the US will release its inflation data for the previous month – an event that determines interest rate markets worldwide. Already at the start of the week, oil price movements dominated the direction of interest rate markets, while investors await the figures expected today.
Interest rate markets have been moving in a narrow range for days, as shown in market analyses from August 10. In addition to the upcoming US consumer price data, market participants are monitoring geopolitical developments that bring additional uncertainty to the valuation of bonds and equities.
German economy between resilience and structural pressures
German industrial production rose 0.2% month-on-month in June 2026, following a 0.7% increase in May, as announced on August 7. The growth was mainly driven by stronger production in the automotive industry – a sector that traditionally plays a key role in Germany's export economy.
This silver lining is clouded by several headwinds. In early August, water levels in German rivers reached unprecedented lows, as an analysis from August 4 shows. This situation represents a considerable setback for the German economy, as low water levels impair the transport of raw materials and goods on waterways.
Inflation pressure from expiring tax relief measures
German inflation showed its "uglier side" in July 2026, as an analysis from July 30 put it. The federal government had previously granted a time-limited tax relief on fuels. With the end of this measure, headline inflation – the gauge that includes all consumer prices – rose noticeably.
The development illustrates how strongly government interventions can affect the inflation rate in the short term. At the same time, it highlights the challenge for the European Central Bank (ECB), which must balance cyclical risks and price stability objectives.
Market outlook: relative valuations under geopolitical pressure
The relative valuation of bonds of various maturities and regions is complex given the geopolitical situation, as an assessment from August 11 notes. Investors must consider the interactions between oil prices, interest rate developments, and political risks.
Today's release of US inflation data is likely to clarify whether the US Federal Reserve will continue its restrictive monetary policy course or see room for easing. This has immediate effects on the dollar-euro exchange rate and thus on the competitiveness of German exporters.