Today we might assist to a defining moment for interest rates and the fate of the economy in the US. The CPI for the month of July will be published, with a consensus of 2.9%. Anything below that mark, will increase rate cuts expectations for September, but as the old saying goes we need to be careful about what we wish for, because we might get a recession with it. Inflation might be easing because the economy is cooling down, and hopefully the Fed sees that before it’s too late to act. Shelter, the biggest component of CPI, might be the key to get a lower reading that will push the Fed to act. PPI numbers published yesterday were encouraging as they were better than expected, particularly the Core PPI (ex food and Energy), with a reading of 2.4% vs 2.7% expected.
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Source: TKL
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