Menu
Inflation Report and Bank Downgrades Headline Relatively Light Economic Data Week

Inflation Report and Bank Downgrades Headline Relatively Light Economic Data Week

Inflation Report and Bank Downgrades Headline Relatively Light Economic Data Week

Major equity indexes were mixed last week as investors assessed the most recent inflation reading and bank downgrades. Global equities (represented by the MSCI All Country World Index) were down -0.58%, and domestic stocks (represented by the S&P 500 Index) were down -0.27%.

Consumer Price Index

The Consumer Price Index released last Thursday showed a headline annual rate of 3.2% in July, slightly below consensus estimates. Core inflation (excludes energy and food prices) rose at an annual pace of 4.7%, down from 4.8% in June. Shelter costs continue to be the largest contributor to the index, but it is rising at its lowest monthly pace of 0.4%. While still off from the Fed’s 2% inflation goal, markets still expect the Fed to keep rates steady for the remainder of the year. According to the CME FedWatch Tool, markets are pricing in a 60% probability of the target Fed Funds rate remaining still and only a 32% probability of an additional 0.25% rate increase through their December FOMC meeting.

Inflation Report and Bank Downgrades Headline Relatively Light Economic Data Week
Source: CME FedWatch Tool

Downgraded Ratings

Credit rating agency Moody’s downgraded 10 small and midsized US banks last week while also putting several larger banks, such as BNY Mellon, on review. The downgrades occur during a time of challenge for the banking industry as higher lending rates and heightened asset-liability management risks pose increased pressures on profitability.

US Index of Consumer Sentiment

A preliminary reading of the University of Michigan’s US Index of Consumer Sentiment showed a slight drop in August to 71.2 from 71.6 in July, the highest reading of the year. The index hit a decade-low in June 2022 with a reading of 50.0, and we entered 2023 with a reading of 64.9 in January.

Retail Sales

This week retail sales will be reported for July. June’s sales rose 0.2% month-over-month, shy of expectations and at a slower rate than the two months prior. Retail sales have continued to grow despite potential recessionary economic conditions.

I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.

Mike Horwath

Mike heads the internal Investment Committee that is responsible for the investment direction of the firm. He works closely with Diversified’s financial planners to support the investment side of the lifelong financial planning process. Lastly, it’s Mike’s responsibility to oversee the ever-changing global investment landscape and work with the planners to evaluate the impact on each of our client’s strategies.

Related Posts

Financial planning and Investment advisory services offered through Diversified, LLC. 

Diversified is a registered investment adviser, and the registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC.

A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax advisor, accountant, or other professional concerning the application of tax law or an individual tax situation.

Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

Please note, the information provided on this website is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. The content on this website is not intended to provide tax, legal, or accounting advice, and you are advised to seek out qualified professionals that provide advice on these issues for your individual circumstances.

Diversified, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. Diversified only transacts business in states in which it is properly registered or is excluded or exempted from registration.  A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. Diversified does not provide tax or legal advice and individuals should seek the advice of their own tax or legal advisors for specific information regarding their situations. Investments in securities involve risk, including the possible loss of principal. The information on this website is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

www.finra.org | www.sipc.org | Privacy Policy