The U.S. stock market finished marginally higher as investors digest a mix of economic data. Interest rates were also little changed as the benchmark 10-year treasury yield increased from 2.08% to 2.09%. Meanwhile the spread between the 10-year treasury yield and the 2-year treasury yield fell from 0.29% to 0.27%. The price of gold was virtually unchanged at $1,345 an ounce, while the U.S. Dollar Index (DXY) rose from 96.59 to 97.55 amid strong reports on retail sales. The price of crude oil continues to fall as it drops 2.9% to $52.51 a barrel as growing oversupply of the commodity swamps its demand.
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This Week’s Economic Highlights
- The Producer Price Index (PPI), a measure of wholesale inflation, increased by 0.1% in May. Given the moderate monthly increase, over the past year PPI has slowed from 2.2% to 1.8%. However, core PPI (which excludes the volatile food and energy prices) rose by a strong 0.4% in May, and increased its annual rate from 2.2% to 2.3%.
- The Consumer Price Index (CPI), a measure of retail inflation, also increased by 0.1% in May. Over the past year CPI has grown at a rate of 1.8%, down from 2.0% the month prior. Core CPI (which excludes the volatile food and energy prices) also rose by 0.1% in May, while its annual growth rate fell from 2.0% to 1.8%.
- Initial unemployment claims rose by a slight 3,000 to 222,000 for the week ending May 8th, while the more stable four-week average increased by 2,500 to 217,750. Continuing unemployment claims, which lag initial claims by a week, rose by an even slighter 2,000 to 1.69 million. Both initial and continuing unemployment claims remain near historic lows.
- U.S. retail sales jumped by a strong 0.5% in May with broad gains in all areas of the retail sector. That said, excluding automobile sales (which consists of a large portion of retail sales and has inconsistent month-to-month demand), retail sales still rose by 0.5%.
- U.S. industrial production increased by a much needed 0.4% in May after falling by a cumulative 1.21% over the prior five months. Capacity utilization also edged slightly higher, increasing from 77.9% to 78.1%.
“The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function. One should, for example, be able to see that things are hopeless yet be determined to make them otherwise.”
– F. Scott Fitzgerald
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