Knowledge Is Power

Underlying US inflation accelerated in July to the strongest pace since the start of the year, though a tepid rise in goods prices tempered concerns about tariff-driven price pressures.

There were two main releases of note this week. The first was from the Institute of Supply Management which reported its services gauge declined to 50.1 in July from 50.8 previously.

The US merchandise-trade deficit shrank in June by more than forecast, reflecting a broad decline in imports. The shortfall in goods traded narrowed 10.8% to $86 billion from the prior month, Commerce Department data showed Tuesday.

Investors got a view of the health of the housing market through the usual two key reports—new and existing home sales data. Existing home sales, which comprise about 90% of residential transactions, fell to a nine-month low thanks to high prices.

Underlying US inflation rose in June by less than expected for a fifth month, as lower car prices helped offset gains in other goods exposed to tariffs. The consumer price index, excluding the often volatile food and energy categories, increased 0.2% from May, according to Bureau of Labor Statistics data out Tuesday.

The Labor Department reported that initial jobless claims for the week ending July 5 fell by 5,000 to 227,000. The median forecast in a survey of economists conducted by Bloomberg called for 235,000 applications so, once again, the job market surprises to the upside.