Hello, this is Claire Ellerhorst, Senior Portfolio Manager at Fifth Third Bank with this week’s Economic Beat.
Major U.S. equity indices were mixed last week with the S&P 500 Index and Nasdaq Composite each falling for a second straight week, while the Dow Jones Industrial Average rose. The S&P 500 was down 0.3%, the Nasdaq Composite was down 1.9% and the Dow gained 0.7% in total return. The upward pressure on interest rates continued, with the 10-year U.S. Treasury yield ending the week at 4.16% and the 2-year U.S. Treasury yield rising to 4.89% as of Friday’s close.
Inflation continues to show signs of modest cooling, as data from the Bureau of Labor Statistics showed that the consumer price index (CPI) rose 3.2% year-over-year in July, slightly higher than the previous month but better than anticipated. Core inflation excluding volatile food and energy prices increased 4.7% from a year earlier. The producer price index (PPI) came in a bit hotter than expected amid a notable increase in services prices. In other economic news, weekly initial jobless claims rose and retraced most of July’s decline, but still reflect a tight labor market.
Federal Reserve officials’ commentary leaned somewhat dovish last week, with three policymakers suggesting the central bank was essentially done tightening. Philadelphia Fed President Patrick Harker, a voting member, said the Fed may be able to be patient and hold rates steady from here, but cautioned that his view was based on current data and could change, and that he did not believe rate cuts were likely in the near future.
In the week ahead, the U.S. consumer is in focus with the start of retail earnings season, likely to highlight key macro themes including consumer resilience and inflation headwinds. The economic calendar brings the July retail sales release, housing data, industrial production and leading economic indicators. Minutes from the Federal Reserve’s July Federal Open Market Committee meeting are released, which may shed more light on the central bank’s path ahead.
As always, we’ll be watching and reporting back to you. Thank you.