Key Economic Indicators Shake Markets as Fed Decision Looms

Movers and shakers!

By Mark O’Brien, Senior Broker

General:   

So far this week, two of three important measures of the U.S. economy have been released: Tuesday’s Producer Price Index and today’s Consumer Price Index, both from the Labor Department and both providing the latest inflation data.  Tuesday’s report measuring average price changes seen by producers and manufacturers showed wholesale inflation slowing, up just 0.1% month-over-month and falling to 2.2% year-over-year.

The Consumer Price Index (CPI), a broad-based measure of prices for goods and services, increased 0.2% for the month, putting the 12-month inflation rate at 2.9%, its lowest since March 2021.  Excluding food and energy, core CPI came in at a 0.2% monthly rise and a 3.2% annual rate

Many analysts have been calling for the Federal Reserve to start lowering borrowing costs given the descendent inflationary readings this year, to which Central Bank chairman Jerome Powell has replied consistently after every FOMC meeting, to paraphrase, “patience.”

According the CME Group FedWatch tool, there is now a ±64% probability that the Fed will lower the Federal target rate range by 25 basis points down to 5.00-5.25% at their September FOMC meeting.  Including tomorrow’s Retail Sales report from the U.S. Census Bureau, there are numerous events on the horizon to give the Fed. more to think about:

Metals: 

A powerful workers union is behind a current labor strike in Chile.  Because it’s virtually paralyzed the world’s largest copper mine – producing nearly 5% of the world’s copper in 2023 – keep an eye on those developments and the futures contract with the informal PhD in economics.  December copper prices are near 5-month lows, just above $4.00/lb. after falling over $1.00/lb from a May 20 close at $5.0185 – a $25,000 per contract move.

Energies:  

U.S. natural gas futures rose today for the sixth time in seven sessions ahead of tomorrow’s  weekly inventory report that’s expected to chip away further at the large storage surplus.  September futures have traded ±27 cents (±$2,700) off its Aug. 5 close of $1.942 /MMBtu., up to $2.216 /MMBtu.

Daily Levels for August 15th, 2024

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* This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.