Stocks took their cue from inflation readings this week.  While the consumer price index came in lower than expected on Thursday, the producer price index came in higher than expected on Friday.  Still most analysts are predicting the FED will likely skip a September rate increase as rates are still restrictive at this level.  Major stock indices ended the week mixed.

China, the world’s second largest economy, continues to show weakness confounding predictions of a post covid zero boom.

Treasury bond yields rose with the 30-year bond yield at 4.266% and the 10-Year note at 4.164%.  Freddie Mac reported that the average 30-year mortgage rate rose to 6.96%.  Crude oil rose to $83.08 a barrel and natural gas rose to $2.781 per MMBTUs.  The U.S. dollar index rose to 102.86 and gold fell to $1945.60 an ounce.

1. China reported:
   1. Exports fell 14.5% in July from a year ago.  This was down from 12.4% in June.
      1. Exports to the U.S. and Europe fell 20%.
      2. Exports to Russia rose 52%, but are still about 1/3 of the exports to the U.S.
   2. Imports fell 12.4% year over year, down from a 6.8% decline in June.
   3. Consumer prices fell 0.3% in July from a year ago.
      1. Excluding volatile food and energy, prices rose 0.8% from a year ago.
   4. Producer prices fell 4.4% in July from a year ago, down from 5.4% year over year in June.
2. The Federal Reserve Reported:
   1. Consumer credit increased at a seasonally adjusted annual rate of 4% during the second quarter.
      1. Revolving credit increased at an annual rate of 7.1%, while nonrevolving credit increased at an annual rate of 3%. 
      2. In June, consumer credit increased at an annual rate of 4.3%.
      3. Credit card debt has now exceeded $1TN for the first time and has expanded each of the past 7 quarters.
      4. Total consumer debt is now $17.06TN.
3. The Commerce Department reported
   1. The U.S. trade deficit fell by 4.1% in June.
   2. Wholesale inventories fell 0.5% in June following a 0.4% decrease in May.  Still wholesale inventories have recovered from the post pandemic supply chain shock.

1. The Labor Department reported:
   1. The consumer price index rose 0.2% in July and is up 3.2% from a year ago.  This is up from the 3.0% year over year reading in June.
      1. Excluding volatile food and energy the price index also rose 0.2% in July and 4.7% from a year ago.  This was down from 4.8% year over year in June.                             Source: US department of Labor

1. 1. The producer price index rose a seasonally adjusted 0.3% in July and 0.8% from a year ago.
      1. Excluding volatile food and energy, producer prices were unchanged in July.
      2. Goods producer prices rose 0.1% in July.
      3. Services producer prices rose 0.5% in July.
   2. Seasonally adjusted first-time claims for unemployment were 248,000, an increase of 21,000 from the previous week’s level.
      1. The 4-week moving average of claims, designed to smooth out volatility, were 231,000 an increase of 2750 from the previous week’s level. 
      2. For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf .

1. 1.  
2. The EIA weekly oil report is here: http://ir.eia.gov/wpsr/wpsrsummary.pdf .  Also, the EIA reported in the prior week:
   1. Field production of crude oil rose from 12.2MM BPD to 12.6MM BPD.
   2. Natural gas storage rose 29BN cubic feet and is above the 5-year average at this time of year.
3. Baker Hughes reported the number of active oil rigs was unchanged at 525.  The number of active natural gas was fell 5 to 123.

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.factset.com/earningsinsight

https://www.wsj.com/articles/chinese-exports-fall-at-steepest-pace-since-february-2020-e930246b?mod=economy_lead_story

https://www.federalreserve.gov/releases/g19/current/

https://www.newyorkfed.org/microeconomics/hhdc.html

https://www.wsj.com/articles/china-slips-into-deflation-in-warning-sign-for-world-economy-bbefb179?utm_source=newsshowcase&utm_medium=gnews&utm_campaign=CDAqDwgAKgcICjDW3MkBMOfLFTC7iNoB&utm_content=rundown&gaa_at=la&gaa_n=AfHvTEsBe_uJF1jzbCZTLjkPx5CI4mHfQd5Ai_7lPxjhSLKhM7VsD9M-uecoYbkXY1vDuZcJpkC5QQihkg_hFse8Z4FNYOvKoQ%3D%3D&gaa_ts=64d41aa2&gaa_sig=hbSt-HA7JBuJR-EzmUantgfbKY0JzTAiqhnpn6XVPI1V4P54teO4fVkOP8ydUUhw6zhGCRkEM_N-w8zPI95cTQ%3D%3D

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

https://www.bls.gov/news.release/ppi.nr0.htm