US Economic Weakness Demand Careful Monitoring

US Economic Weakness Demand Careful Monitoring

US Economic Weakness Demand Careful Monitoring


US import prices rose less than expected in June as rising costs for petroleum products were offset by declining consumer and capital goods prices, indicating inflation remains benign in here.

The marginal increase reported by the US Labor Department Wednesday reflects the effects of the USD’s rise between June 2014 and December 2015, despite the Bucks weakening this year Vs the currencies of the United States’ peers.

Import prices increased 0.2% last month after jumping 1.4% in May. Import prices excluding petroleum dropped 0.3% after gaining 0.4% the prior month.

Economists polled had forecast import prices rising 0.5% in June.

In the 12 months through June, import prices fell 4.8%, the smallest decling since November 2014.

The USD rose 20% on a trade-weighted basis between June 2014 and December 2015, putting downward pressure on import prices and keeping inflation below the Fed’s 2% target.

Though the USD has weakened this year, it has recouped the bulk of its losses in the wake of last month’s vote in Britain to leave the EU dubbed Brexit.

It is now down only 0.94% on a trade-weighted basis.

“Lackluster global growth and a further rise in the dollar should keep import prices tame, but the more modest rate of dollar appreciation relative to 2015 suggests a less severe trend,” said a senior economist at Wells Fargo (NYSE:WFC) in Charlotte, NC.

U.S. financial markets were little moved by the data.

Last month, imported petroleum prices rose 6.4%, while food prices stumbled 1.3%. Prices for imported capital goods slipped 0.3% and consumer goods, excluding automobiles fell 0.2%. Imported industrial supplies and materials prices excluding fuels fell 0.3%.

The report also showed export prices increased 0.8% in June, after rising 1.2% in May. Export prices fell 3.5% from a year ago.

Prices for agricultural exports increased 2.4%, boosted by higher Soybean and Corn prices. Prices for non-agricultural exports rose 0.5% last month.

The increase was led by gains in prices for industrial supplies and material, as well as capital goods. But prices for consumer goods exports fell.

Wednesday, the US major stock market indexes finished at: DJIA +24.45 at 18372.12, NAS Comp -17.09 at 5005.73, S&P 500 +0.28 at 2152.42

Volume: Trade was below average with about 815-M/shares exchanged on the NYSE

  • Russell 2000 +5.8% YTD
  • DJIA +5.4% YTD
  • S&P 500 +5.3% YTD
  • NAS Comp Unch YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.31) Neutral (0.19) Very Bullish (0.50) Bullish (0.25)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.25) Bullish (0.25) Bullish (0.35) Neutral (0.14)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.37) Neutral (0.23) Very Bullish (0.56) Bullish (0.31)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Neutral (-0.22) Neutral (-0.15) Bearish (-0.33) Neutral (-0.17)

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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