US Consumer Prices Unchanged, Inflation Slows

US Consumer Prices Unchanged, Inflation Slows

US Consumer Prices Unchanged, Inflation Slows

$DIA, $SPY, $QQQ, $VXX

US consumer prices were unchanged in July as the cost of gasoline fell for the 1st time in 5 months and underlying inflation slowed, which could further diminish prospects of a US Fed interest rate increase this year.

The Labor Department said Tuesday that the flat reading in its Consumer Price Index was the weakest since February and followed 2 straight monthly increases of 0.2%. In the 12 months through July, the CPI rose 0.8% after increasing 1.0% in June.

Economists had forecast the CPI would be unchanged last month and rise 0.9% from a year ago.

Core CPI, which strips out food and energy costs, edged up 0.1% in July. It had risen by 0.2% in the previous 3 consecutive months. The Y-Y core CPI increased 2.2% after rising 2.3% in June.

The US Fed has a 2% inflation target and tracks an inflation measure which has been stuck at 1.6% since March. Coming in the wake of last week’s weak retail sales report for July, the tame inflation reading could see financial markets dialing back their rate hike expectations for Y 2016.

A September rate hike has been priced out and traders bets on a December hike have fallen drastically

In July, gasoline prices fell 4.7%, the 1st decline since February, reflecting renewed declines in Crude Oil prices.

Within the core CPI basket, housing and medical costs continued to rise. Owners’ equivalent rent of primary residence jumped 0.3% after increasing by the same margin in June.

Medical care costs climbed 0.5% after rising 0.2% in June. The cost of hospital services increased 0.4% and doctor visits costs rose 0.7%. Prices for Rx medicine up 0.9%.

Prices for new motor vehicles rose for the 1st time since February, while prices for apparel were unchanged after falling 0.4% in June.

Tuesday, the US major stock market indexes finished at: DJIA -84.03 at 18552.02, NAS Comp -34.90 at 5227.11, S&P 500 -12.00 at 2178.15

Volume: Trade was light with about 730-M/shares exchanged on the NYSE

  • Russell 2000 +8.6% YTD
  • S&P 500 +6.6% YTD
  • DJIA +6.5% YTD
  • NAS Comp +4.4% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.40) Bullish (0.35) Bullish (0.33) Very Bullish (0.50)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.31) Bullish (0.26) Neutral (0.17) Very Bullish (0.50)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.25) Neutral (0.07) Bullish (0.46) Neutral (0.22)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Neutral (-0.24) Neutral (-0.14) Bearish (-0.28) Bearish (-0.29)

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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