August 22, 2016   //   Financial Planning   //   By Mueller Solutions

August 22, 2016

IS A 2016 INTEREST RATE HIKE STILL POSSIBLE?

According to the minutes from the Federal Reserve’s July monetary policy meeting, some Federal Open Market Committee members felt “that economic conditions would soon warrant taking another step in removing policy accommodation.” Others favored waiting longer to adjust rates, contending that the strong hiring seen in recent months would presently moderate. Fed officials broadly agreed that more economic data would be needed before any action.

 

NO CPI ADVANCE IN JULY

The federal government’s Consumer Price Index went nowhere last month, leaving yearly inflation at a mere 0.8%. The core CPI advanced another 0.1%, which put the 12-month gain in core consumer prices at 2.2%. In the year ending in June, annual headline inflation was at 1.0%; core inflation, at 2.3%.

    

HOUSING STARTS RISE 2.1%

This gain comes on the heels of the 5.1% advance for June (first recorded by the Census Bureau as a 4.8% gain). July’s improvement sent the seasonally adjusted annual rate of groundbreaking to a 5-month high. The pace of building permits ticked down 0.1% last month.

     

CALM TIMES ON WALL STREET

As the trading week wrapped up, the S&P 500 settled almost precisely where it had seven days earlier. For the week, the index lost 0.01% on its way to a Friday close of 2,183.87. The Dow gave back just 0.13% on the week, settling at 18,552.57 Friday. A 0.10% weekly advance left the Nasdaq at 5,238.38 at Friday’s closing bell.

    

THIS WEEK: Nothing major is slated for Monday. Tuesday, Wall Street considers July new home sales figures and earnings from Best Buy, Intuit, J.M. Smucker, Kirkland’s, La-Z-Boy, Regis Corp., and Toll Brothers. Wednesday, July existing home sales numbers arrive plus earnings from Express, Guess?, HP, and Williams-Sonoma. Reports on initial jobless claims and July durable goods orders complement earnings announcements from Autodesk, Burlington Stores, Dollar General, Dollar Tree, GameStop, Medtronic, Michaels Companies, and Tiffany & Co. on Thursday. Federal Reserve chair Janet Yellen delivers a speech on the central bank’s monetary policy toolkit Friday morning in Wyoming; away from Jackson Hole, the University of Michigan’s final August consumer sentiment index and the second estimate of Q2 GDP will both arrive Friday, plus earnings from Big Lots.

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Sources: wsj.com, bigcharts.com, treasury.gov – 8/19/16

Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation.

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