There was several significant news announcements likely have an influence on monetary policy.
There was also drama between President Donald Trump and Fed Chair Jerome Powell that weighed on the markets this week. Powell has drawn Trump’s ire for failing to cut interest rates, which the president believes should be at least 300 basis points lower than they are today. Trump later came out and said that Powell would likely be replaced in eight months when his term is up.
On Tuesday, it was revealed that inflation had jumped to 2.7 percent on an annualized basis in June. This was higher than the projected 2.6 percent and higher than last month’s 2.4 percent.
It was also revealed that overall inflation was up 0.3 percent in the past month while core inflation was up 0.2 percent. Analysts had predicted that both would increase by .3 percent this month. Economists believe that inflation could continue to go higher as tariffs imposed on most nations begin on the first day of August.
Still, economic data remains strong. On Wednesday, the Price Producers Index (PPI) was released and revealed that prices were flat on a monthly basis. The same was true for the Core PPI, and it was believed that both core and overall PPI would increase by 0.2 percent in June. It’s worth noting that core PPI for May was revised upward to 0.4 percent while overall PPI was revised upward to 0.3 percent in May.
Thursday saw the release of retail and core retail sales figures for June. During that time, retail sales overall went up by 0.6 percent while core retail sales were up by .5 percent. Retail sales were only expected to increase by 0.1 percent while core retail sales were only expected to rise by 0.3 percent in June.
Also on Thursday, unemployment claims for the week were made public. Over the past seven days, there were 221,000 requests for benefits, below the expected 233,000.
On Friday, the University of Michigan released its consumer sentiment and inflation expectation reports. Consumer sentiment rose to 61.8 compared to 60.7 last month. Respondents believe that inflation will be at 4.4 percent a year from now, which was lower than last month when respondents said that inflation would be at 5 percent a year from now.
The S&P 500 finished up 57 points this week to finish at 6,296, which is just off the all-time high set on Friday morning. On Wednesday, the market made its low of the week when it dipped to 6,224.
The Dow was off by just 1.84 points this week to close at 44,342. On Wednesday morning, the index made a low of 43,912 before reversing and hitting a high of 44,536 on Thursday.
Finally, the Nasdaq finished the week up 394 points to close at 20,895. The market began the week at its lowest point, which was 20,499 and made its high of the week Friday morning when it hit 20,971.
In international news, Canada announced on Tuesday that its median CPI in June was 3.1 percent on an annualized basis. Furthermore, inflation was .1 percent on a monthly basis over the same period. Great Britain announced on Wednesday that its inflation rate was 3.6 percent on an annualized basis in June. Finally, Australia announced Wednesday evening that its economy added 2,000 jobs in June and that the country’s unemployment rate increased to 4.3 percent.
American traders will notice that the upcoming week is light on the news. The only major scheduled announcements are the Flash Manufacturing and Flash Services PMIs slated to come out Thursday. However, there will be big news coming out of Europe as the European Central Bank makes an interest rate decision on Thursday morning.