“Systems don’t need to be changed. The trick is for a trader to develop a system with which he is compatible.” — Ed Seykota

1. US Producer Prices Rise Less Than Forecast — The producer price index for final demand increased 0.1% from a month earlier, according to a Bureau of Labor Statistics. The median forecast in a Bloomberg survey of economists called for a 0.2% gain. Compared with a year ago, the PPI rose 2.2%. The PPI excluding the volatile food and energy categories was unchanged in July from the prior month, the tamest reading in four months. The core PPI rose 2.4% from a year ago. Against a backdrop of dissipating inflationary pressures, weak July jobs figures prompted economists to pencil in a series of Federal Reserve interest-rate cuts beginning next month.
2. Core US Inflation Eases a Fourth Month, Sealing Fed Rate Cut — The so-called core consumer price index — which excludes food and energy costs — increased 3.2% in July from a year ago, still the slowest pace since early 2021. The monthly measure rose 0.2%, a slight pickup from June’s surprisingly low reading, Bureau of Labor Statistics figures showed Wednesday. Economists see the core gauge as a better indicator of underlying inflation than the overall CPI. That measure also climbed 0.2% from the prior month and 2.9% from a year ago. BLS said nearly 90% of the monthly advance was due to shelter, which accelerated from June. Inflation is still broadly on a downward trend as the economy slowly shifts into a lower gear. Combined with a softening job market, the Fed is widely expected to start lowering interest rates next month, while the size of the cut will likely be determined by more incoming data.
3. US Retail Sales Beat Forecasts, Defying Calls of Weaker Consumer — The value of retail purchases, unadjusted for inflation, increased 1% in July and helped by a sharp snapback in car sales, Commerce Department data showed Thursday. Excluding autos and gasoline stations, sales were up 0.4%. Ten of the report’s 13 categories posted increases. Car sales bounced back strongly after a cyberattack on auto dealerships led to a sizable drop in June. Electronics and appliances also posted solid gains. E-commerce sales rose at a modest clip, potentially reflecting heavy discounting in the period by Amazon.com Inc.’s Prime Day and other promotions from Walmart Inc. and Target Corp.
4. Harris Calls for Expanded Child Tax Credit, 3 Million New Housing Units — Vice President Kamala Harris called for a substantial expansion of the child tax credit, set a goal of building 3 million new housing units and pledged to penalize companies that engage in price gouging, while warning that former President Donald Trump’s trade policies would raise prices. The vice president sought to contrast her approach with Trump’s, criticizing the former president for proposing an across-the-board tariff of at least 10% on imports.

The week ahead — Economic data from Econoday.com:

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