After a Friday selloff coinciding with the triple expiration of stock options, stock index futures, and stock index options contracts most major indices ended lower with the exception of the developed international stocks.  Both consumer and producer price increased rose in August increasing the likelihood of an additional Fed rate increase later this year. 

Labor contracts with GM, Ford and Stellantis expired with the automakers and the UAW far apart in negotiations.  The UAW is striking one plant at all three automakers.  This is the first time the UAW has struck all three automakers at the same time.  It remains to be seen for how long and what impact the strikes will have on the overall economy.

Saudi Arabia and Russia extended their voluntary production cut of 1MM barrels per day through the end of the year.  OPEC has forecast an inventory drawdown reaching 3.3MM barrels per day in the 4^th quarter.

The European Central Bank met and raised its short-term interest rate 0.25% to 4.0%.  Inflation in the EU was 5.3% in August from a year ago.

Treasury bond yields rose with the 30-year bond yield at 4.420% and the 10-Year note at 4.331%.  Freddie Mac reported that the average 30-year mortgage rate rose to 7.18%.  Crude oil rose to $91.14 a barrel and natural gas rose to $2.659 per MMBTUs.  The U.S. dollar index rose to 105.32 and gold rose to $1944.50 an ounce.

• The Federal Reserve reported that industrial production rose 0.4% in August and is up 0.2% from a year ago.
  • Manufacturing production rose 0.1% in August and is down 0.6% from last August.
  • Mining, including oil and gas production, rose 1.4% in August and is up 3.9% from a year ago.
  • Utility production rose 0.9% in August and is up 1.2% from last August.
• The Labor Department reported:
  • The Consumer Price Index for All Urban Consumers (CPI-U) rose a seasonally adjusted 0.6% in August following a 0.2% increase in July.
    • From a year ago the index has risen 3.7%.
    • Excluding food and energy, the index rose 0.3% in August, up from 0.2% in July.
    • Energy rose 5.6% and food rose 0.2%. Source:  The Labor Department

• • The Producer Price Index rose 0.7% in August. 
    • Excluding food energy and trade services producer prices rose 0.3% in August and 3.0% from last August.
  • Seasonally adjusted first-time claims for unemployment were 220,000, an increase of 3,000 from the previous week’s revised level of 217,000.
    • The 4-week moving average of claims, designed to smooth out volatility, were 224,500 a decrease of 5000 from the previous week’s revised level. 
    • 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 rose from 12.8MM BPD to 12.9MM BPD.
  • Natural gas storage rose 57BN cubic feet and is above the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs rose 2 to 515.  The number of active natural gas rose 8 to 121.

Please call us if you have any questions.

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

Founder / Emeritus                                                                            President & C.E.O.                                  

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.

Sources:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

https://ir.eia.gov/ngs/ngs.html

https://www.freddiemac.com/pmms

https://www.wsj.com/market-data?mod=nav_top_subsection

https://bakerhughesrigcount.gcs-web.com/na-rig-count

https://www.census.gov/economic-indicators

https://www.bls.gov/cpi/

https://www.bls.gov/ppi/

https://www.federalreserve.gov/releases/g17/current/default.htm