“The key during a crisis is to be (a) insulated from the forces that require selling and (b) positioned to be a buyer instead.” ― Howard Marks

1. Housing Could Provide More Fuel for Inflation — Overall annual inflation rose to 8.6% in May, while core inflation, which excludes volatile food and energy costs, hit 6%, according to the Labor Department’s consumer-price index. The June figures are set to be released Wednesday. Rising fuel costs and supply-chain disruptions from Russia’s war against Ukraine added to inflation that was already high due to surging demand from the economy’s reopening and aggressive government stimulus. Annual housing inflation, as measured in the CPI, hit a recent low in early 2021 at 1.4% and it has since rebounded, to 5.4% in May, well above the annual average of 3.5% between 2015 and 2019.
2. U.S. Inflation Hits New Four-Decade High of 9.1% — U.S. consumer inflation rose to a new four-decade high at an annual rate of 9.1% in June, extending a year and a half stretch of persistently higher prices.
The consumer-price index’s rate of increase last month was the highest since December 1981, the Labor Department reported. It also eclipsed May’s annual rate of 8.6% that led Federal Reserve officials to shift to a faster pace of benchmark interest-rate increases in its campaign to bring down inflation. Core prices, which exclude volatile food and energy components, increased by 5.9% in June from a year earlier, slightly less than May’s 6.0% gain, the Labor Department said. The report likely keeps the Fed on track to raise its benchmark interest rate by 0.75 percentage point at its meeting later this month.
3. Euro Slips Below Dollar as Europe’s Economic Fortunes Slump — the euro’s slide below parity with the U.S. dollar reflects Europe’s sinking economic fortunes in the face of the war in Ukraine. But unlike the last time the euro was this weak 20 years ago, nobody is coming to the common currency’s rescue. Reaching parity—when two currencies are equal in value—is largely symbolic for investors, and is expected to have a limited impact on financial markets. But a weak euro does affect the region’s economy. It drives up the cost of imports and fans Europe’s already high inflation rate while making what Europe exports cheaper in international markets.
4. U.S. Retail Sales Rose 1% in June — consumers spent more last month across a range of goods that also surged in price, including gasoline, groceries and furniture. They also spent more at restaurants, as dining out became more expensive. Recent economic figures paint a mixed picture on the state of the economy, fueling an uncertain outlook and growing fears that a recession is looming. The Federal Reserve is also under pressure to raise rates aggressively to bring down high inflation. Manufacturing output fell for the second straight month in June, the Fed said Friday. Consumer sentiment in early July held near the lowest level on records, with nearly half of surveyed consumers blaming inflation for eroding their living standards, the University of Michigan’s index of consumer sentiment said. Home construction is also slowing.

The week ahead — Economic data from Econoday.com:

This entry was posted on Monday, July 18th, 2022 at 5:42 pm and is filed under Weekly Summary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.