To The Moon

US market sentiments for week ending 16 Aug 2025 was influenced “more” by US economic reports than by companies’ quarterly earnings, that is tailing off with only a handful left to report.

Reports that left their marks included:

• US consumer price index.

• US weekly jobless claims.

• US producer price index.

• US retail sales.

• US consumer sentiments.

Consumer Price Index (CPI).

On Tue, 12 Aug 2025, US Bureau of Labour Statistics (BLS) reported that for July 2025:

Headline inflation.

• Index increased a seasonally adjusted 0.2% for the month and 2.7% on a 12-month basis, ‘cooling’ by -0.1% for monthly data and remaining status quo for annual data.

Core inflation.

• Core CPI increased 0.3% for the month and 3.1% from a year ago.

• Compared to June’s data, monthly data increased by +0.1% and annual by +0.2%, pushing core inflation above 3.0% since February 2025.

Tuesday’s inflation data is important for US Fed that is facing a challenging economic situation where prices are rising (again) while jobs market is weakening.

Although the government and analysts know the Fed focus on core inflation numbers, they still insisted the Fed would cut interest rates come September 2025, after headline CPI data was released.

US Jobless Claims.

(1) Weekly.

For the week ending 9 Aug 2025, initial weekly jobless claims fell by -3,000 to 224,000 vs economists’ estimates of 230,000. (see above)

Thursday’s report showed that the 4-week average of claims, that smooths out some of the week-to-week volatility, ticked up by +750 to 221,750. This provides a “better” insight than the weekly actuals.

(2) Continuing.

Similarly, for the week ended 2 Aug 2025, US continuing claims fell by -15,000 to 1.953 million. (see above)

Although this is a decrease, continuing claims remain somewhat elevated, showing some softness in the labour market but no major weakness.

Economists said the continuing claims trend is consistent with US unemployment rate rising to 4.3% in August 2025, from July 2025’s 4.2%.

After Thursday claims number were out, US market continued to price in an interest rate cut from the Fed come September because of US labour market weakness?

However, some economists reasoned that (a) rising services inflation as well as (b) expectations of more expensive goods due to tariffs, could make the Fed hesitant to pull the trigger.

Producer Price Index (PPI).

All surety about an impending September 2025 interest cut melted away when US Producer inflation report was out on Thu, 14 Aug 2025. (see above)

PPI data shows wholesalers are now passing tariff inflation to consumers

Tariff inflation is indeed coming to a store near US consumers.

That was the loud & clear message coming from July’s producer price index (PPI) data, that showed that wholesalers across the supply chain have moved to pass higher prices from Trump’s levies along to consumers, having tried to insulate them earlier in the year.

Headline inflation.

PPI (MoM) jumped a whooping +0.9% in July 2025 vs economists’ forecasts of +0.2% vs June 2025’s 0.0%.

It was the largest monthly increase since June 2022 and that brought wholesale inflation rate to 3.3% YoY, the highest since February 2025.

Needless to say, this is well above the Fed’s 2% inflation target.

Core inflation.

Excluding volatile food and energy prices, core PPI were similarly elevated.

• On a month-over-month basis, it was up +0.9% (just like headline PPI) vs analysts’ forecast of 0.2% vs June 2024’s 0.0%.

• Annually, it was up 3.7% YoY vs analysts’ consensus of 2.9% vs June 2024’s 2.6%.

Data Analysis.

The increase in July’s inflation was mainly caused by higher prices in the Services sector.

It rose by +1.1%, the biggest increase since March 2022.

• Drilling down further, trade services margins were up 2%, a jump tied to Trump’s continued tariff strategies, that is bleeding into domestic wholesale pricing.

• Machinery and equipment wholesaling alone accounted for 30% of that overall service increase, after spiking 3.8%.

• Portfolio management fees also surged 5.8%, and airline passenger services prices climbed 1.0%, both adding fuel to the inflation fire.

These increases show up before consumers even touch the products, clearly indicating that price pressures are working their way through the pipeline.

With the data out, the question on everyone’s mind is will the Fed be prompted to reassess its interest rate strategy ?

Given that high reading may indicate pressure on inflation path, with continued volatility in economic data leaving the door open for flexible decisions by monetary policymakers.

Retail Sales.

On Fri, 15 Aug 2025, US Census Bureau released the retail sales report for July 2025.

Retail sales rose +0.5% vs June 2025’s upwards revised +0.9% and was marginally lower than economists polled (by Reuters) forecasted retail sales of +0.6%. (see above)

Excluding autos and gas, retail sales data is a little sad at +0.2% for July.

Friday's report marks the 2nd straight month retail sales rose after 2 months of declines in May and April, especially with May's -0.9% heightening fears over the health of the US consumer.

According to FWDBONDS, Chief economist, Christopher Rupkey:

• Retail sales do not give the economy a complete bill of health.

• At least the consumer is not in headling retreat.

• And outlook for continued moderate economic growth for Q3 2025 remains positive.

Consumer Sentiments.

According to the latest preliminary readout from the University of Michigan's sentiment survey out on Fri, 15 Aug 2025 — US consumer sentiment index has dropped to 58.6 for August 2025, from July 2025’s final reading of 61.7. (see above)

Economists polled by Reuters had forecast the index would increase to 62.0 instead.

Consumer sentiment falls for 1st time in 4 months as inflation expectations surge.

• Buying conditions for durables plunged -14%, its lowest reading in a year, on the basis of high prices.

• At the same time, consumers’ 12-month inflation expectations increased to 4.9% in August 2025, from July 2025’s 4.5%.

• Long-run inflation expectations rose to 3.9% from 3.4% last month.

Overall consumers continue to expect both inflation and unemployment to deteriorate in the future.

• Share of consumers expecting unemployment to worsen in the year ahead currently stands at 60%, a “high” reading last seen in the Great Recession (1929) vs about generic 32% in November 2024 & Year 2022.

Reports’ Continued Dominance?

Will US economic reports continue to dominant and overall influence US market sentiments for the week beginning 18 Aug 2025 ?

Reports out this week include:

• Mon, 18 Aug - Home builder confidence index.

• Wed, 20 Aug - Minutes of Fed's July FOMC meeting.

• Thu, 21 Aug - US Jobless claims - weekly & continuing.

• Thu, 21 Aug - S&P flash US services PMI and manufacturing PMI.

• Thu 21 Aug - US leading economic indicators.

These are not the ‘heavy weight’ reports that most will hawk over.

Nevertheless, they do reinforce or diminish what is known about the state of US economy.

Jackson Hole Symposium.

Instead, what Wall Street and us investors should pay closer attention to is the impending Jackson Hole Economic Policy Symposium that will be held from Aug 21 - 23 in Jackson Hole, Wyoming.

This year’s theme is “Labour Markets in Transition: Demographics, Productivity, and Macroeconomic Policy”.

The annual affair over a 3-day international conference is hosted by the Federal Reserve Bank of Kansas City.

It convenes central bankers, top economists, policymakers, and select journalists from around the world to discuss current economic issues, financial trends, and policies.

The event is considered one of the most exclusive and influential gatherings in global finance, and the discussions often shape monetary policy and impact markets worldwide.

Fed chair, Mr Jerome Powell, plays a central role at the Jackson Hole Symposium.

His speeches at this event are highly anticipated because they often provide critical insight into the Fed's monetary policy direction, including decisions about interest rates, inflation targets, and policy frameworks.

Mr Powell’s remarks can move global financial markets, as investors and policymakers look for clues about the Fed's next moves.

The question remaining is whether Stephen Miran, (a ‘radical’ pro-Trump element nominated by the president to takeover the seat vacated by Governor Adriana Kugler), will be confirmed in time by the Senate, to join the invitees only symposium ?

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• Do you think US market sentiments this week will still be heavily influenced by US reports?

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