Major stock indices rose substantially this week as both the consumer price index and the producer prices index fell more than expected in June.  While the CPI was up 3.0% from a year ago, the PPI has only risen 0.1% for the same period, mostly due to lower energy prices.  Excluding volatile food and energy, CPI was 4.8% and PPI was 2.6%, year over year, significantly above the FED’s target.  Comments from FED members this week supported more rate hikes this year.

Canada’s central bank raised its benchmark interest rate 0.25% to 5% and left the door open to further increases if necessary to bring down inflation.

Treasury bond yields fell with the 30-year bond yield at 3.925%and the 10-Year note at 3.825%.  Freddie Mac reported that the average 30-year mortgage rate rose to 6.96%.  Crude oil rose to $75.24 a barrel and natural gas fell to $2.531 per MMBTUs.  The U.S. dollar index fell to 99.99 and gold rose to $1959.50 an ounce.

• The Federal Reserve reported that seasonally adjusted consumer credit rose at a 1.8% annual rate in May down from a 5% annual rate in April.
  • Revolving credit rose at an 8.2% annual rate down from a 13.8% annual rate in April.
  • Non-revolving credit, fell at a 0.4% annual rate, down from an 2.0% annualized gain in April. 
• The Labor Department reported:
  • The consumer price index rose 0.2% in June and 3.0% from a year earlier.
    • Excluding volatile food and energy consumer prices rose 0.2% in June and 4.8% from a year ago.

• • The producer price index, rose 0.1% in June following a drop of 0.4% in May.
    • From last year, producer prices rose only 0.1%.
    • Excluding volatile food and energy, wholesale prices fell 0.2% in June and are up 2.6% from last June.  This is down from 2.8% year over year in May.
  • Seasonally adjusted first-time claims for unemployment were 237,000, a decrease of 12,000 from the previous week’s revised level.
    • The 4-week moving average of claims, designed to smooth out volatility, were 246,750 a decrease of 6,750 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 fell from 12.4MM BPD to 12.3MM BPD.
  • Natural gas storage rose 49BN cubic feet and is above the 5-year average at this time of year.
• Baker Hughes reported the number of active oil rigs fell 3 to 537.  The number of active natural gas rose 2 to 133.

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.bls.gov/news.release/jolts.nr0.htm

https://www.pmi.spglobal.com/public/release/pressreleases

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

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

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

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

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