This morning's announcement of the CPI left me scratching my head as it so often has the last couple of years. Not to worry, the June CPI was 0 today and tomorrow we should get the PPI. The report said that, with the DROP in energy prices, the CPI was able to have a flat month. The stock market thought that news was great and proceeded on a quick up move taking the Dow above the 10,600 level.
Later in the day, oil managed to drop 5% but for some reason that didn't do much to the stock market. I guess it had gone up enough for one day. For the bond market's part, the CPI news popped it up a little early but even the oil drop failed to generate any excitement in the bond market today. The bond market closed down a trace today. Apparently the bond market has "known" about the inflation number for quite some time as it yawned and rolled over for a snooze after the news. We do think the bond market topped on day of the June jobs report with its key reversal that day and its failure to break above that number to date.
The gold complex couldn't get out of the way of Low inflation and falling oil prices as gold went down about $5 and the HUI was hit for over 6 points. This is not the type of ratio gold bulls like to see, remembering that the stocks move ahead of the metals. We will keep our eyes open for any further developments here.
In my favorite news of the day, in a CNN article today someone wrote that a flat to inverted yield curve doesn't mean that the economy is going to get weaker. It means that the Federal Reserve is getting weaker. In what might be considered the biggest effort to discredit the Fed's latest position on raising short term rates, this article is saying the Fed is losing its power of longer term interest rates. I believe this is in an attempt to convince people that the ongoing housing boom will keep going and that higher interest rates from the Fed will not be able to stop it. Did I read this right? I am amazed at some of the journalism out there today.
Dow Industrials: 10,628.89 +71.50
BGEIX: 10.98
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2 comments:
why wouldn't lower cpi and ppi be good the market - with consumer confidence level up
Low inflation is good for the market but just because the CPI and PPI are reported lower doesn't necessarily mean they are lower.
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