Markets generally ignored the slightly higher than expected increase in July’s Producer Prices. The PPI rose 0.2% from the month earlier. Compared with a year ago, the PPI rose 2.6%. Stripping out food and energy, the core rate increased 0.4% from the month before and 3.0% from a year ago.
As noted, both measures were higher than forecasted and indicated rising inflation not declining on a month over month and year over year basis.
Markets also ignored mixed bulge bracket bank earnings and a gauge of consumer sentiment that unexpectedly declined to the lowest level in eight months as high prices continued to weigh on psychics.
Led by the mega sized techs traded marginally higher on the steadfast belief the Fed will lower interest rates, perhaps by September.
Earnings season accelerates this week. How will the results be interpreted?
The economic calendar is comprised of retail sales, import/export prices and several housing statistics.
Last night the foreign markets were down. London was down 0.33%, Paris down 0.60% and Frankfurt down 0.35%. China was down 1.52%, Japan down 2.45% and Hang Seng down 1.52%.
Futures are up about 0.4% as the markets are increasing the odds that Donals Trump would win in November. The yield curve is steepening as some believe a Trump Administration may pursue a more expansive fiscal policy. The 10-year is off 14/32 to yield 4.24%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
