Here’s what happened in the markets last week: Core CPI was slightly higher than expected, coming in at 0.30% month-over-month. This increase was driven primarily by a 10.6% surge in gasoline prices. The three-month annualized core CPI now stands at 2.4%, progressing towards the Fed’s long-run inflation objective of 2%. U.S. consumers continued to spend, as evidenced by stronger-than-expected retail sales growth of 0.60% month-over-month compared to an expected 0.20%. However, consumers spent 5.2% more at gasoline stations in August. Oil prices are expected to be flat or decline for the rest of the year, easing inflationary pressures and relieving consumers’ wallets.
This week, the FOMC meets and will likely leave the federal funds rate unchanged for the second time this year. We are near the peak of this interest rate cycle! Tuesday’s housing starts and permits report will provide data on the supply of new homes coming to market. New homes are necessary to ease the current supply and demand imbalance and make homes affordable for first-time buyers.
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