Raymond Kanyo, CFA
MarketBites: 9.1% Inflation Sends Markets Lower
Portfolio Manager Commentary:
Stocks finished lower as June's inflation data came in hotter than expected. Year-over-year, inflation is up 9.1% vs. 8.8% expected (5.9% vs. 5.7% excluding food and energy prices). The mood was worsened by comments from Fed Governor Bostic, who mentioned that "everything is in play" to combat price pressures. In response, traders have ramped up the odds of a 1% rate hike at the next Fed meeting.
The silver lining could be that commodity and housing prices have started to cool in recent weeks. Also, retail giants are reporting inventory build-ups, which will eventually lead to discounts, and consequently, lower inflation.
Moving forward, bank earnings are the next "big thing." JPMorgan is reporting today. The firm's earnings report could give investors insights into the health of the overall economy.
Chart of the Day:
June's inflation data came in at 9.1%, the highest mark since 1981. According to CNBC, since January of 2021, inflation is up a cumulative 12.6%. While equities have been under pressure this year, they remain one of the best ways to counter inflationary forces in the long run. If equities are not your cup of tea, real estate is another asset class that has historically performed well against inflation.
Source: CNBC, Labor Department
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