The Summer Doldrums Have Set-in – Halyard’s Weekly Wrap – 8/11/23

As we close out the second week of August, the summer doldrums have set-in on the capital markets.  This week was mostly devoid of breaking economic data, save for the inflation indices released yesterday and this morning.  CPI was mixed, with the year-over-year measure ticking up to 3.2% from the 3.0% logged last month, but on the month-over-month core inflation registered 0.2% for the second consecutive month, the smallest back-to-back gain in more than two years.  The Producer Price Index showed similarly subdued results, drawing a collective “Ho Hum” from traders happy to let August drift by with limited volatility.

The relatively benign inflation reports are likely to give the Fed enough reason to pause at their next Open Market committee meeting.  While the committee members have been surprisingly quiet lately, the minutes of the July FOMC meeting are to be released next week and could possibly give an updated insight into their thinking.

For the week, the yield curve drifted higher with the 2-year note closing 10 basis points higher at 4.87% and the long bond 5 basis points higher at 4.25%.  Similarly, stock prices were subdued this week with the S&P 500 less than 1% lower.

In addition to the FOMC minutes, Retail Sales and housing starts data will be released next week.  Retail Sales are expected to tick higher as consumers continued to spend in July, but housing is likely to remain in the funk it’s been experiencing since rates began to rise last year.