US Consumer Spending Up, Inflation Down, USD Falling

US Consumer Spending Up, Inflation Down, USD Falling

US Consumer Spending Up, Inflation Down, USD Falling

$DIA, $SPY, $QQQ, $VXX

US consumer spending rose a bit in July and annual inflation increased at its slowest pace since late Y 2015, diminishing expectations of a Fed interest rate hike in December.

Inflation remains low even as the labor market is near full employment, a conundrum for the Fed.

Other data Thursday showed a small increase in new applications for unemployment benefits last week amid a tightening job market.

The US Commerce Department said consumer spending, which accounts for nearly 70% of US economic activity, increased 0.3% last month after a 0.2% gainer in June.

Some economists polled had forecast consumer spending rising 0.4% in July.

The PCE (personal consumption expenditures) price index excluding food and energy edged up 0.1% in July. The core PCE price index, which is the Fed’s preferred inflation measure, has risen by the same margin for 3 months running

In the 12 months through July, the core PCE price index increased 1.4%, the smallest gainer since December 2015. That followed a 1.5% rise in the 12 months through June. The core PCE price index has undershot the Fed’s 2% target for the past 5 years.

The combination of moderate consumer spending and low inflation casts doubts on whether the Fed will increase interest rates at its December FOMC meeting, as most economists expect.

Fed Watchers expectedit  to announce a plan to start reducing its $4.2-T portfolio of Treasury bonds and mortgage-backed securities next month.

Prices of US Treasuries rose rose a bit after the data while USD fell against a basket of currencies.

The CBOE Volatility Index (VIX) at 10.63, -0.53 dropped 5.3% in Thursday’s session, marking a 3-week low.

Thursday, the US major stock market indexes finished at: DJIA +55.67 at 21949.40, NAS Comp +60.35 at 6428.64, S&P 500 +14.06 at 2473.10

Volume: Trade on the NYSE came in at: 941-&M/shares exchanged

  • NAS Comp +19.4% YTD
  • DJIA +11.1% YTD
  • S&P 500 +10.4% YTD
  • Russell 2000 +3.6% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.30) Neutral (0.22) Bullish (0.44) Bullish (0.25)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.28) Bullish (0.25) Bullish (0.33) Bullish (0.25)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.27) Neutral (0.17) Bullish (0.31) Bullish (0.33)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.31) Neutral (-0.23) Bearish (-0.40) 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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