Money in a Minute for the Week Ending June 14

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Freeman / Money Talks News

Every weekend, I recap “news you can use” from the week — a handful of quotes from major (and often expensive) news sources — so you can stay up to date on the news that affects your money without spending a dime and in less than a minute.

Here’s an overview of what happened this week.

Traders Are Bracing for Volatility on Fed-CPI Double Blow (June 10, Bloomberg)

Whether it’s another move up or a dive down, traders are bracing for added volatility wrought by Wednesday’s dual macroeconomic catalysts: a report on consumer prices in the morning and the Federal Reserve’s rate decision in the afternoon.

While markets broadly expect central bankers to hold rates steady, the inflation print as well as Fed Chair Jerome Powell’s press conference will offer more clarity on how much the central bank may cut interest rates this year.

US small business sentiment up in May (June 11, Reuters)

The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose eight-tenths of a point to 90.5 last month, the second consecutive month it has risen after slumping in March to the lowest level since December 2012.

Despite the gain, it was the 29th straight month the index was below the 50-year average of 98.

World Bank boosts forecast: Strength of US economy will support global growth of 2.6% this year (June 11, Associated Press)

But the agency cautioned that global growth remains sluggish by past standards, that the poorest countries are struggling under the weight of heavy debts and high interest rates and that increased trade barriers endanger prosperity worldwide.

Stronger-than-expected growth in the United States — the world’s biggest economy — accounted for 80% of the World Bank’s upgraded outlook.

Inflation slows in May, with consumer prices up 3.3% from a year ago (June 12, CNBC)

The CPI, a broad inflation gauge that measures a basket of goods and services costs across the U.S. economy, held flat on the month though it increased 3.3% from a year ago, according to the department’s Bureau of Labor Statistics.

Following the report, stock market futures pushed higher while Treasury yields slid.

How will the soft May CPI reading impact the Fed? By starting the clock on a potential September rate cut. (June 12, MarketWatch)

Headline inflation in May was flat, the lowest reading in two years.

The data is going to cause the Fed to rip up its script and make big changes to its decisions, said Krishna Guha, vice chair of Evercore ISI.

“The Fed will be breathing a sigh of relief,” Guha said, adding that the late-breaking data “starts the clock on a potential September rate cut.”

Fed recap: Chair Powell explains why the central bank isn’t ready yet to cut rates (June 12, CNBC)

The Federal Reserve held interest rates steady at their current range of 5.25% to 5.5%, but revised its outlook for rate cuts to just one in 2024. Central bank policymakers noted that there has been “modest further progress” toward its 2% inflation objective.

US Producer Prices Surprise With Biggest Decline Since October (June 13, Bloomberg)

US producer prices unexpectedly declined in May by the most in seven months, adding to evidence that inflationary pressures are moderating.

The producer price index for final demand decreased 0.2% from a month earlier, Bureau of Labor Statistics data showed Thursday. Compared with a year ago, the PPI rose 2.2%.

Jobless claims jump to highest level in 10 months (June 13, MarketWatch)

Initial jobless claims surged by 13,000 — to 242,000 — in the week ending June 8, the Labor Department said Thursday. That’s the highest level of claims since last August.

The labor market is no longer overheated, Federal Reserve Chair Jerome Powell said Wednesday.

Import prices fall sharply in another sign of fading U.S. inflation (June 14, MarketWatch)

The import price index dropped 0.4% last month. Economists polled by the Wall Street Journal has forecast no change.

Big picture: Inflation is still running above low prepandemic levels, but if prices continue to ease over the summer, the Federal Reserve could cut interest rates as early as September.

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I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.

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