Last week, America was told inflation is better. Also worse. Also, by Friday, core consumer prices came in hot and consumer sentiment fell off a cliff—which is a lot to hand somebody just days before they decide on interest rates.
- The S&P 500 lost 0.8% and the Nasdaq fell 0.7% during the week. Energy and communication services led, health care lagged, value mostly beat growth, and Japan (!) was the only major international market to close the week barely positive, which is the equivalent of one kid at the birthday party who didn't cry, but was thinking about it.
- The Bloomberg U.S. Aggregate Bond Index dropped 1% as yields climbed, with the 10-year U.S. Treasury yield hitting 4.97% and the 30- year reaching 5.36%. Bonds spent two years cultivating a "responsible adult in the room" reputation and then just—nope, wildin'.
- Crude oil blew past $100 a barrel. Gold slipped to $4,409 an ounce, silver went down with it, and somewhere a guy who's been telling you gold is "the only real money" is very quiet right now.
- The dollar was little changed against the euro and pound but weakened versus the yen. Currency markets were surprisingly calm during the week, which in finance is usually when the ominous background music starts.
- The headline consumer-price index (CPI) rose 0.4% in August and held at 3.4% year over year, with gasoline responsible for over a third of the monthly increase. Core CPI (which strips out food and energy) came in at 0.3% against a 0.2% expectation, even as annual core eased to 2.4%, its lowest since March 2021. So inflation is quieter than it's been in five years, and the part that's still making noise is mostly coming from the gas pump.
- The headline producer-price index (PPI) increased 0.4% in August and 5.4% year over year, while core PPI came in cooler than expected at 0.2% for the month. That gap is mostly energy, which means producers are largely just forwarding their oil bill to everyone else.
- The University of Michigan's preliminary September consumer sentiment survey fell to 47.8 from 51.7, while one-year inflation expectations jumped to 4.6% from 4.0%. Consumers are looking at the economy the way George Costanza looked at the blinking voicemail light on his desk phone after missing a call from Human Resources: nothing's confirmed yet, but he already knows.
- Consumer credit expanded by $18.1 billion in July against expectations of about $12 billion. People are borrowing more so they can buy things while insisting they've never been more worried about buying things, which is a normal human arrangement, just rarely this well documented.
- Existing home sales fell to 3.98 million in August from 4.06 million even as inventory climbed to 1.62 million homes and 4.9 months of supply (the highest in over a decade). Think of the U.S. housing market as an open house with plenty of cookies, a friendly agent, a lovely little sign out front, and everyone walking through does the math on a 6.81% 30-year mortgage and decides they were just being nosy
- Wholesale inventories rose 1.3% in July while sales increased 0.8%, nudging the inventory-to-sales ratio to 1.20 from 1.19, though still well below the 1.28 of a year ago. Sales are up 13% year over year against 5.7% for inventories, so warehouses have plenty of room and are finally using some of it.
- Real hourly earnings fell 0.1% in August, down 0.3% year over year, though real weekly earnings ticked up 0.2% for the month. Meaning workers are only getting ahead by working more hours for the same buying power, which is a longer shift wearing a raise's name tag.
- Initial jobless claims dipped 1,000 to 206,000 for the week ending Sept. 5, while the four-week average fell 1,500 to 206,000. Continuing claims edged down 1,000 to 1.774 million for the week ended August 29. Given everything else in this recap, this stability is the closest thing to a standing ovation the labor market's going to get.
- 2Q earnings season wrapped with 496 of 500 S&P 500 companies reporting, 85.7% beating estimates against a long-term average of 67.5%, and earnings growth at 53.4% year over year (49.5% ex-energy). At this point, corporate America is the guy running the Fool the Guesser booth at the county fair, and you keep paying him because surely, he can't get your weight right a fifth time—and he does, and now you're out twenty bucks and a little bit of your sense of self.