Inflation reports help US Market recover fully ?
Inflation and its Effects.
Inflation will rule the US market this week.
US stocks opened higher on Tue, 13 Aug 2024, as Wall Street digested cooler-than-expected inflation data and awaited an update on consumer prices.
The $S&P 500(.SPX)$ rose by +1.68%, while $NASDAQ(.IXIC)$ rebounded by +2.43%, with the $DJIA(.DJI)$ inched up by +1.04%. (see above)
Producer Price Index (PPI).
One of the non-consumers economic reports, the US producer price index (PPI), often a signal for where consumer prices are heading, rose just +0.1% MoM in July 2024, lower than forecast of 0.2%.
YoY, the PPI rose +2.2%, nearly in line with the Fed’s 2% target for inflation and more importantly -0.5% lower than June 2024 data (2.7%). (see below)
US producer prices increased less than expected due to “cost of services fell by the most in nearly 1-1/2 years” amid signs of diminishing pricing power for businesses.
This is evidence of a waning inflation pressures that reinforced hopes of an interest rate cut next month.
More importantly:
The PPI also showed favorable readings for most of the components that go into the calculation of the personal consumption expenditures (PCE) price index, tracked by the Fed for monetary policy.
Based on the latest PPI data, economists' estimates for July core PCE price index ranged from 0.14% to 0.2%.
These estimates could change after July's consumer price data on Wednesday.
Moderating inflation should allow the US central bank to focus more on the labor market.
As noted by FWDBONDS, Chief Economist, Christopher Rupkey:
July PPI increases cooled this month is good news for the Fed’s inflation fight.
Without PPI deflation also means that the Fed do not have to rush to judgment and bring rate cuts forward because the economy is headed downhill.
CPI & Forecast.
The PPI release serves as a prelude to Wed, 14 Aug 2024 inflation report - the Consumer Price Index (CPI).
(1) Recap.
June headline inflation YoY came in at 3.0% vs forecast of 3.1% & May’s 3.3%.
Core CPI YoY for June 2024 came in at 3.3% vs forecast of 3.4% & May’s 3.4%.
(2) For July 2024.
Morningstar forecasts
The CPI is forecast to rise 0.2% in July after declining 0.1% in June
Core CPI is forecast to rise 0.2% in July, up from 0.1% in June
The CPI YoY is forecast to rise 3% after rising the same amount in June
Core CPI YoY is forecast to rise 3.2%, down from the 3.3% increase in June.
The Federal Reserve Bank of Cleveland
Project headline CPI will come in at 0.24% MoM.
Core CPI will be 0.27% MoM.
Third Inflation Report.
July's retail sales reading, a key indicator of the health of the US consumer, is set to follow on Thu, 15 Aug 2024.
Recap - June 2024.
US’s June 2024 retails sales increase 2.3% YoY, following an upwardly revised 2.6% rise in May.
US retail sales YoY averaged 4.76% from 1993 until 2024.
It reached an all-time high of 52.50% in April 2021.
And a record low of -19.90% in April of 2020.
July 2024 Forecast.
Economists expect July 2024 retail sales will show it moved higher again.
However, the post-pandemic spending spree may be close to an end.
According to economists surveyed by the Wall Street Journal and Dow Jones Newswires — July 2024 sales likely increased +0.3% MoM vs June 2024 sales of 0.0%.
My Viewpoints: (mine only!)
There is a saying “Data don’t lie”.
If both CPI and Retail sales reports fall in line with economists’ forecasts, will a positive outcome contribute to a US market recovery by this Fri, 16 Aug 2024?
All inflation data is aligned and pointing in the same direction. Agree ?
Must Read: Click on below titles to access. Give a like & help to repost ok. Thanks.
Do you think remaining two inflation reports’ data will be as per economists’ forecasts ?
Do you think US market will recover all its lost grounds by this Friday ?
If you find this post interesting, give it wings! ️ Repost and share the insights ?
Do consider “Follow me” and get firsthand read of my daily new post. Thank you.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Pls "Re-post" so that more get to know. Tks! Rating is important (to me).
Consider "Follow me" and get first hand read of my Daily new posts? Thanks!). Tks!