Disinflation was in the air!
To the great relief of the Federal Reserve, the American economy has been experiencing “disinflation,” which is a slowdown in the rate of inflation. For example, last week we learned that:
Inflation fell to a two year low in June. The Consumer Price Index (CPI) showed that prices rose just 3 percent from June 2022 through June 2023. That was lowest inflation has been in two years, reported Augusta Saraiva of Bloomberg.
Core inflation was lower, but not as low. The core CPI, which excludes volatile food and energy prices, also dropped to a two-year low, coming in at 4.8 percent. While inflation is still well above the Federal Reserve’s target rate of two percent, the slower rate of increases was welcome news for everyone who has been concerned about the effects of higher costs on their budgets.
Producer prices flattened. The Producer Price Index followed on the heels of the CPI. It showed that prices were almost flat for producers, rising just 0.1 percent over the 12 months through June 2023. Reade Pickert of Bloomberg reported, “Normalizing global supply chains, stabilizing commodity prices, and a broader shift in consumer demand toward services and away from goods have generally helped alleviate inflationary pressures at the producer level.”
Disinflation should not be confused with deflation, which happens when the inflation rate is negative, and prices fall. While deflation may sound attractive, it is usually associated with undesirable economic conditions, including recessions and stagnant growth, reported the Federal Reserve Bank of Richmond.
Last week, major U.S. stock indices finished higher, according to Barron’s. The Standard & Poor’s 500 and Nasdaq Composite Indexes hit new highs mid-week on positive inflation and earnings news. U.S. Treasuries rallied early and then changed direction with yields moving higher toward the end of the week, reported Rita Nazareth of Bloomberg.
|Data as of 7/14/23||1-Week||YTD||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor’s 500 Index||2.4%||17.3%||18.9%||12.1%||10.0%||10.4%|
|Dow Jones Global ex-U.S. Index||4.6||10.6||16.7||4.3||1.4||2.3|
|10-year Treasury Note (yield only)||3.8||N/A||3.0||0.6||2.9||2.6|
|Gold (per ounce)||1.6||7.8||14.9||2.6||9.5||4.3|
|Bloomberg Commodity Index||2.6||-7.3||-6.4||16.5||4.8||-2.0|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
NEW FRONTIERS IN FUNGUS. Anyone who has watched The Last of Us, a series that features a fungus mutation that turns humans into zombies, may be interested to learn that scientists and engineers have been exploring and developing new ways to harness the power of fungi and bacteria. Here are some of the ideas they’re working on:
Mushrooms may help make technology more eco-friendly.
Weekly Focus – Think About It
“Courage is like — it’s a habitus, a habit, a virtue: you get it by courageous acts. It’s like you learn to swim by swimming. You learn courage by couraging.”
—Marie M. Daly, chemist
https://www.bloomberg.com/news/articles/2023-07-12/us-inflation-cools-to-3-and-core-cpi-rises-less-than-forecast (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/07-17-23_Bloomberg_US%20Inflation%20Hits%20Two%20Year%20Low_1.pdf)
https://www.bloomberg.com/news/articles/2023-07-13/us-producer-prices-rise-at-slowest-pace-in-nearly-three-years (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/07-17-23_Bloomberg_US%20Producer%20Prices%20Approach%20Deflation_3.pdf)
https://www.digitaltrends.com/computing/myceliotronics-future-computer-chips-mushroom-based/ (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2023/07-17-23_Digital%20Trends_How%20Computer%20Chips%20Made%20of%20Mushrooms%20Could%20Be%20the%20Future_10.pdf)
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* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
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