July 13, 2018
Import prices showed weakness in June including prices for steel and aluminum which had spiked following the imposition of tariffs in March. The results underscore yesterday's flat readings in the consumer price report and also comments yesterday from Jerome Powell who said the Fed is very close to stabilizing inflation at their 2 percent goal.
Trade war talk or not, stocks had a very good week with the Dow rising 2.3 percent to 25,019 and showing a year-to-date gain at 1.2 percent. Money eased out of the bond market but mostly among shorter-dated maturities. The spread between the 2-year yield and the 10-year narrowed several more basis points in the week and now stands at 25 points (2-year at 2.58 percent and the 10-year at 2.83 percent). The tighter this spread narrows, the closer it gets to flashing a traditional recession signal for the economy. The dollar firmed on the week with the dollar index, at 94.75, adding 0.8 percent. Oil ended near $70.75 with gold near $1,241.