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US Macro: CPI at 3.2%, Jobless Claims Grow
CPI print showed inflation rose to 3.2% annually in July, compared to the expected 3.3%.
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The yearly inflation rate was 3.2% in July, almost aligned with expectations but still significantly higher than the Federal Reserve’s desired 2%. The jobless claims data for the week that ended August 5 rose to 248,000, exceeding the consensus projection of 230,000.
Inflation Lower Than Estimated but Jobless Claims Rise
The new consumer price index (CPI) print showed that annual inflation stood at 3.2% in July, slightly lower than economists’ consensus expectations of 3.3%. However, the yearly rate increased compared to the June reading of 3%.
Month-on-month, prices rose 0.2%, in line with the estimates.
Meanwhile, core CPI, disregarding volatile food and energy costs, also climbed 0.2% for the month. Annual core CPI was reported at 4.7%, compared to the Dow Jones consensus projection of 4.8%.
While the US Federal Reserve will welcome the lower-than-expected CPI reading, the same cannot be said for jobless claims, which exceeded expectations. Specifically, jobless claims for the week that ended on Aug. 5 stood at 248,000, representing a 21,000 surge from the week prior and well ahead of the estimated 230,000.
The four-week moving average was 231,000, new data showed, 2,750 higher than in the previous week. Continuing claims were 1.68 million, short of the 1.7 million consensus. The US economy added 187,000 jobs last month, less than the projected 200,000.
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Market reaction
Financial markets showed a mixed reaction to the CPI and jobless claims reports. Although crypto prices fell in the past 24 hours, the digital assets were green on the 1-hour chart, with Bitcoin, Ethereum, Dogecoin, and XRP slightly rising by less than 1%.
At the same time, futures tied to the Dow Jones Industrial Average climbed almost 200 points, while Treasury yields trended lower. Nasdaq and S&P 500 futures also rose 29.5 and 148 points, respectively.
The latest economic data negatively affected the US dollar strength index, slipping 0.5% to 102 at the time of publication.
While inflation remains notably higher than the Fed’s desired 2% target, the decelerating prices are expected to take some of the pressure off the Federal Reserve to keep hiking rates. The US central bank delivered another 25 bps hike last month, expected to be the last one for now.
How will Fed react to the latest CPI and jobless claims data? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
