Below are the economic and market highlights for the week:
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A mild Consumer Price Index (CPI) print ignited investor optimism for a September rate cut. The CPI rose 2.70% in July on an annual basis, unchanged from the prior month. Price declines for staples like groceries and gasoline more than offset higher prices for transportation services and used cars and trucks. However, core CPI, which excludes volatile food and energy, rose 3.10% from a year ago. That’s up from a 2.90% annual pace in June and is the fastest annual rate for core CPI since February. Goods prices rose a modest 0.20% on the month as companies largely held back from hiking prices on consumers. Services prices, however, rose 0.40% month-to-month, driven by higher transportation and medical care services.
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While the CPI report clearly put investors in rallying mood early in the week, not all signs were positive. A hotter than expected Producer Price Index (PPI) report on Thursday forced investors to recognize that the total impact of the recent tariff deals has yet to be fully reflected in the supply chain. The PPI jumped 0.90% in July, its biggest monthly increase since June 2022. Year-over-year, producer prices were up 3.30%, their biggest 12-month move since February. Core PPI also rose 0.90% from the previous month and was up 3.70% from the year ago period. Goods inflation was more pronounced in the PPI report, increasing 0.70% month-to-month. Services inflation also rose, increasing 1.10%.
- The consumer remained a resilient economic factor in July, bucking the gloomy jobs and inflation outlook. Retail sales rose 0.50% month-to-month. Excluding autos, retail sales rose 0.30%. Motor vehicles, furniture, and online sales pushed the headline figure higher. Those items helped to more than offset lower receipts at bars and restaurants, building materials and garden stores, and electronic and appliance stores.
Bulls Shake Off Inflationary Signals
Market bulls continued their record setting summer rally this week, scoring new all-time highs for both the S&P 500 and Nasdaq Composite Index. A lighter than expected headline CPI print helped drive markets to new record highs and had investors cheering a September Fed rate cut as a “done deal”. Thursday’s hot PPI report should have been more sobering than it ultimately was, however. Producer prices spiked 0.90% month to month – their biggest monthly increase since June 2022. The disconnect between investors’ enthusiasm over the CPI report and their willingness to ultimately disregard the warning signals in the PPI reports exhibits little logic other than investors choosing to believe what they want to believe. The market seems convinced that so long as no one metric gets too bad, then the near-term political pressure is such that they are going to get their rate cut. The problem of course is that the near-term data doesn’t reflect the longer-term equilibrium since many tariffs were suspended until recently. Additionally, companies have chosen to spare consumers the brunt of price increases by having stockpiled pre-tariff inventory and with their willingness to absorb their tariff costs to defend their market share. Just as tariffs were never likely to be as damaging as economists had predicted in April, they are likely to be a lot more costly than present data reflects – yet the heart wants what the heart wants. As of Friday, markets were pricing an 87% chance of a rate cut next month, while at the same time updated pricing models predict inflation will creep higher by 1-1.50% over the same approximate timeframe. In any other environment, the prudent action would be to take a beat, but with the top-down pressure from the Administration, and several FOMC members now on record with dovish comments, Wall Street’s oddsmakers are probably right in their prediction – even if it’s fundamentally for all the wrong reasons. Next week, the Fed will hold its annual Jackson Hole economic symposium. While no major policy announcements are likely to be made, investors will undoubtedly be glued to the symposium looking for signs of inflation everywhere including the average price paid for a cowboy hat by the city slickers attending the event.
The Week Ahead
Central bankers, finance ministers, business leaders, and economists trek to Jackson Hole for the Fed’s Annual Economic Symposium. Economic news will be light with housing and Flash PMIs being the highlights of the week.
Flights of Passage
As summer winds down, millions of birds are beginning to take flight in a massive migration south for the winter. Of the more than 650 species of North American breeding birds, more than half are migratory. A multi-year research study published in 2018 found that fall migration brings 4 billion birds into the skies over the U.S. The data was gathered from the first-ever national bird count using weather radar from 143 weather stations. The study is available here. The next few months will provide a stunning spectacle for bird watchers across the country. The U.S. Fish and Wildlife Service estimates that nearly 86 million Americans participate in birdwatching, a hobby that has grown in popularity in recent years. Circles of friends who share an interest in birding and identifying various species of birds often kindly refer to one another as their fellow “bird nerds.” In late summer, birds that journeyed north this past spring to take advantage of cooler temperatures, longer daylight hours, and abundant food sources have finished breeding and raising their young. As winter approaches and the availability of insects and other food sources drops, the birds move south again.
Bird enthusiasts consider fall migration more exciting than spring migration because it occurs at a more leisurely pace. During the spring, birds rush to their breeding locations to claim a territory and find a mate. In the fall, birds stop more frequently to feed and rest along the way to build the energy needed to survive through winter. For birds that migrate long distances, their populations depend on adult birds living through the winter and returning to reproduce the following spring, even if that means expending large amounts of time and energy to travel thousands of miles to favorable wintering grounds. With the longer, drawn-out fall migration timetable, birders have greater opportunities to catch sight of a wide variety of birds depending on where they live, such as sparrows, warblers, hummingbirds, grosbeaks, finches, and waterfowl including ducks and geese. Peak fall migration occurs from around mid-August to mid-October, although some species migrate earlier and later than this window in the contiguous U.S.
Bird watchers interested in knowing the peak migration period for the area where they live can turn to a website called BirdCast that began as a collaboration among the National Audubon Society, Cornell Lab of Ornithology, the Environmental Protection Agency, Clemson University Radar Ornithology Laboratory, the Academy of Natural Sciences in Philadelphia, and GeoMarine, Inc. Today, its three primary partners are The Cornell Lab, Colorado State University, and University of Massachusetts Amherst. BirdCast began its nightly migration forecasting and reporting for this year’s fall migration on August 1. The site provides a live data feed beginning at sunset each night where visitors can see real-time analysis maps of intensities of actual nocturnal bird migration as detected by the U.S. weather surveillance radar network. Birds usually begin to migrate within 30 to 45 minutes after sunset, with the greatest number in flight two to three hours later. The BirdCast site also features local bird migration alerts where visitors can determine if birds in their area are migrating in low, medium, or high densities. These tools are helpful for informing people what days it is most critically important to participate in turning out lights. Bright lights attract and disorient nocturnally migrating birds, causing fatal collisions with buildings and exposure to additional threats. Turning out lights helps reduce the hazards created by light pollution. The Audubon Society’s Lights Out Program shares that a variety of light sources can be detrimental, such as exterior decorative lighting, flood lights, and interior lights of commercial buildings.
For the evening of August 15, 2025, an estimated 114 million birds are predicted to be aloft over the continental U.S. The map for tonight is available here. A list of “Peak Fall Migration Windows for 1,000 Cities” is available here to help birders maximize their chances of seeing the largest number of birds. Lastly, this article shares the 10 Most Spectacular Bird Migrations in the U.S.
Happy bird watching!