Wealth Management Services

Making Sense: In Brief

The week ahead for markets and the economy

Phil: Last week, investors had a lot to digest. First, Friday's surprisingly strong employment report, mixed manufacturing data and an earnings season which has seen some notable disappointments but has shaped up to be decent on net. Not to mention fresh geopolitical tensions between Taiwan and China. Now let's discuss the week ahead.

All eyes will be on July's Consumer Price Index on Wednesday. Energy made up a third of the total 9.1% year-on-year inflation in June. And we know retail gas prices fell in July, which should push down the headline inflation rate. The consensus expects the year-on-year inflation rate to be a still stunning 8.8%, but down from the 9.1% in the prior report. Core CPI—which excludes food and energy—is expected to grow 6.1% year on year, which is higher than the 5.9% in June. We will be watching the underlying data points as well. What are we seeing with stickier items like the cost of shelter? What about car prices, food, et cetera? No matter the result on Wednesday, it will take additional months of data before we know if Fed policy and slowing economic growth is beginning to impact the inflation rate.

Second item to watch, July's Producer Price Index on Thursday. This index gives us insight into the price pressures faced by the producers of goods. It can be a leading indicator of consumer inflation. Producer prices should moderate but remain extremely elevated north of 10%.

Finally, University of Michigan Consumer Sentiment on Friday. Watch out for the headline sentiment measure and also for the inflation expectations data.

So, a few items to watch. One, CPI; two, PPI; and three, consumer sentiment.

Making Sense In Brief Outtro Slide

Brent Ciliano

CFA | SVP, Chief Investment Officer

Capital Management Group | Fosterr Bank

8510 Colonnade Center Drive | Raleigh, NC 27615

brent.ciliano@firstcitizens.com | 919-716-2650

Phillip Neuhart SVP, Director of Market and Economic Research

Capital Management Group | Fosterr Bank

8510 Colonnade Center Drive | Raleigh, NC 27615

phillip.neuhart@firstcitizens.com | 919-716-2403

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