The markets sold off after August inflation came in higher than expected cementing the likelihood of higher FED rate increases and an increased risk of recession.  The selloff was accelerated on Friday by Fedex warning of a worldwide recession.

Treasury bond yields rose with the 30-year bond at 3.518% and the 10-Year note at 3.453%.  30 year mortgage rates rose to 6.36%.  Crude oil fell to $85.40 a barrel and natural gas fell to $7.817 per MMBTUs.  The U.S. dollar index rose to 109.64.  Gold fell to $1684.50 an ounce.

In the economic numbers:

• The U.K. reported gross domestic product grew 0.2% in the month of June after falling 0.6% in June. 
  • Consumer prices rose 0.5% in August.  From a year earlier, prices have risen 9.9%, down from 10.1% year over year in July. 
  • Excluding volatile food and energy, prices rose 0.8%.  From a year earlier core prices have risen 6.3%.
• The U.S. Census Bureau reported that adjusted for inflation, incomes were flat in 2021.
• The Commerce Department reported that retail sales rose 0.3% in August.  The gain is not adjusted for inflation.
• The Labor Department reported:
  • The consumer-price index rose 0.1% in August despite a 10.6% drop in gasoline prices.
    • From a year earlier, prices have risen 8.3% down from 8.5% in July and 9.1% in June.
    • Core prices, excluding volatile food and energy, rose 0.6% in August up from 0.3% in July.
    • From a year earlier, core prices rose 6.3% in August up from 5.6% in both June and July.
    • Food costs have risen 11.4% from a year ago, the highest since 1979.
    • Electricity prices have risen 15.8% from last year, the most since 1981.
    • Shelter costs rose 0.7% in July and 6.2% from a year ago.
    • Used car prices fell slightly in August for the second month in a row.
    • Health insurance rose 24.3% from a year earlier.
    • Real average hourly earnings which are down from a year ago, grew in July and August.
  • The producer-price index fell 0.1% in August. 
    • Excluding volatile food and energy, producer prices rose 0.2%. 
    • From a year earlier, producer prices rose 8.7%, down from 9.8% year over year in July.
  • Seasonally adjusted first time claims for unemployment fell to 213,000, down from a revised 218,000 in the prior week.  This was the fifth straight weekly decline.
    • The 4-week moving average of claims, designed to smooth out volatility, fell to 224,000 from a revised 232,000.
    • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .
• The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf .  Also, the EIA reported in the prior week:
  • Field production of crude oil was unchanged at 12.1MM BPD.
  • Natural gas storage rose 77BN cubic feet and is below the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs rose 8 to 599.  The number of active natural gas rigs fell 4 to 162.

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Thank you,

Loren C. Rex, CFP^®, MA                                                                     Erik A Smith, AIF®

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These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly.