- July CPI rose 2.9% over the last 12 months lower than the expected 3.0%
- This CPI is probably the most important for this year as it will likely be the clear indicator for the Fed interest rate to pivot.
- July nonfarm payroll employment edged up by 114,000, and the unemployment rate rose to 4.3 percent. (Latest monthly jobs report: Non-farm payrolls: +114,000 vs. the expected +175,000; Unemployment rate: 4.3% vs. the expected 4.1%)
- The probability of a Fed interest rate cut of 25 to 50 basis points is getting higher and higher.
- The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis, after declining 0.1 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.9 percent before seasonal adjustment.
- The index for shelter rose 0.4 percent in July, accounting for nearly 90 percent of the monthly increase in the all items index. The energy index was unchanged over the month, after declining in the two preceding months. The index for food increased 0.2 percent in July, as it did in June. The food away from home index rose 0.2 percent over the month, and the food at home index increased 0.1 percent.
- The index for all items less food and energy rose 0.2 percent in July, after rising 0.1 percent the preceding month. Indexes which increased in July include shelter, motor vehicle insurance, household furnishings and operations, education, recreation, and personal care. The indexes for used cars and trucks, medical care, airline fares, and apparel were among those that decreased over the month.
- The all items index rose 2.9 percent for the 12 months ending July, the smallest 12-month increase since March 2021. The all items less food and energy index rose 3.2 percent over the last 12 months and was thesmallest 12-month increase in that index since April 2021. The energy index increased 1.1 percent for the
- In July, the Consumer Price Index for All Urban Consumers rose 0.2 percent, seasonally adjusted, and rose 2.9 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.2 percent in July (SA); up 3.2 percent over the year (NSA).
The economy would benefit drastically if the interest hike started to turn around which is the most likely move that the Fed would take in September's meeting.
Loans are much less likely to go on to default as inflation comes down.
A study by credit agency TransUnion has shown that inflation pushes borrowers with low FICO scores to default. Default is always a concern for investors of lending institutions.
Fed chair Jerome Powell is more likely to cut the rate this year sooner than later as inflation comes down.
The CPI report, interest rate hikes, house prices and rents, wage growth, job openings, unemployment rate, international conflicts, and trade wars all play a significant role in guiding the market's microenvironment.
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