Market on the move

OK, guys why is the market moving so much higher on PPI and CPI?  This is really unusual since mutual funds have been seeing out flows for most of the year.

Core CPI rises modest 0.2% in July

Reports Marketwatch,

Core consumer inflation eased back in July, rising just 0.2% after four months of 0.3% gains, the Labor Department said Wednesday.

The relatively tame 0.2% increase in core consumer price index could help keep the Federal Reserve on the sidelines at next month's policy meeting if August's inflation data do not worsen.

Core prices - which exclude food and energy costs - have risen 2.7% in the past year, the highest since late 2001. Core inflation is running about a half percentage point above the Fed's comfort zone.

So far in 2006, core prices are rising at a 3.1% annual pace, a key reason why the Fed increased overnight interest rates at 17 straight meetings over two years before pausing last week.

Meanwhile, soaring energy costs pushed the total CPI up 0.4% in July, as expected by economists surveyed by MarketWatch. The economists were expecting core prices to rise 0.3%, although a sizable number were predicting the 0.2% rise that was reported.

The CPI is up 4.1% in the past year, compared with a 4.3% increase in the 12 months ending in June

FOMC August 2006

VHF is predicting a 25 bps rate hike by the Fed tomorrow to 5.50%. It comes right down to the numbers don’t lie. Inflation is at the high end of the Bernanke’s target range, a weaker dollar points to higher oil prices, and a data dependant decision says 5.50%.