Weekly Market Commentary August 7th to August 11th 2023

Key inflation measures reported this week were supportive of the consensus view of a pause on rate increases at the September meeting of the FOMC. While still above Fed target levels, inflation has slowed nearly every month since September 2022.

The Consumer Price Index (CPI) for the month of July came in, as expected, at 0.2% for the headline and core readings. Year-on-year rise in prices was 3.2% headline and 4.7% core – excluding food and energy. Sticky shelter costs continue to heavily influence this data set accounting for 90% of the headline figure for the latest month.

The July Producer Price Index (PPI) was modestly higher than anticipated, but a downward revision to the June reading kept concerns at bay. A pickup in services costs led to a 0.3% headline reading this month and a modest 0.8% advance year-on-year. Core PPI was expanded by 2.4% over the past year.

The S&P 500 declined modestly for the week, lower by 0.5% to 4,464. The Nasdaq composite was lower by 1.9%. The yield on the10-Year U.S. Treasury rose by 11 basis points on the week to close at 4.15%.

Key economic releases next week include Retail Sales, Housing Starts & Permits and Industrial Production, along with the release of the minutes of the latest FOMC meeting.