U.S. PCE price index, the Fed’s preferred gauge, rose 3.7% YoY in July, unchanged from June and marking a 65th consecutive month above the Fed’s 2% target; consensus was 3.6%. The PCE rose 0.2% MoM in July, above expectations; June was revised to -0.1% MoM, the weakest reading since April 2020. Escalation in the Iran conflict has stalled the post-spike pullback in inflation and may intensify Fed debate over further hikes versus holding rates. The BEA left Q2 real GDP annualized growth at 1.5%. S

Iran's rally reflects post-conflict asset revaluation, very high inflation expectations and liquidity returning to equities rather than a pickup in real fundamentals. The Tehran Stock Exchange reopened in late May after an ~80‑day suspension following US‑Israeli strikes; TEDPIX, which was around 3.7m points before the halt, has climbed past 6.38m. Inflation remains extreme — Tindex shows July inflation near 87.9% — prompting a shift out of cash into stocks, gold, property and FX, which can drive strong nominal equity gains without corresponding rises in real purchasing power or corporate profits. Many listed firms (petrochemicals, steel, copper, mining, energy and exporters) have revenues or assets linked to dollars or commodity prices, so rial depreciation and inflation can boost nominal revenues and prompt asset revaluation. Market breadth is wide: over 90% of stocks are up and more than 80% have risen 2–3%, pointing to a liquidity‑driven, market‑wide buying wave rather than a narrow, sector‑specific rally.

German Chancellor Merz said Germany will closely cooperate with Canada on artificial intelligence.