The Fed may surprise market participants by hiking interest rates in September, plus another gold bull catalyst.
Another Gold Bull Catalyst
July 1 (King World News) – Otavio Costa: This is probably one of the most important divergences in the economy today.
KING WORLD NEWS NOTE: Expect More QE: Fed Will Continue Rapidly Expanding Balance Sheet In Order To Purchase US Treasuries
The Fed now owns one of the smallest shares of outstanding Treasury debt in over a decade.
Yet federal debt continues to compound at an unsustainable pace.
The Fed always comes to the rescue.
Act accordingly…
Listen to the greatest Egon von Greyerz audio interview ever
by CLICKING HERE OR ON THE IMAGE BELOW.
Fed To Hike Interest Rates In September
Gerald Celente: The Personal Consumption Expenditures Price Index (PCE), the U.S. Federal Reserve’s preferred measure of inflation, rose 0.3 percent in May from April, registering a yearly increase of 4.1 percent, its highest since October 2023.
The PCE excludes costs of energy and food but takes in a broader swath of the economy than the Consumer Price Index. When the PCE adds food and fuel costs, the annual increase was a more modest 3.4 percent.
Energy and related items led prices higher for the month, gaining 4 percent from the month before. Financial services and insurance cost 1.2 percent more and housing 0.3 percent more.
“Inflation is at a three-year high due to the war in Iran and it’s painful for middle-class and moderate-income Americans,” Heather Long, the Navy Credit Union’s chief economist, said in a CNBC interview. “People are spending more on gas, along with healthcare and utilities.
“New Fed chair Kevin Warsh has made his commitment clear to bring inflation down,” she noted. “The key will be how much relief happens by September” when the central bank will once again decide whether to alter its interest rate.
Despite inflation gaining ground, American consumers spent 0.7 percent more in May, more than inflation grew. Personal income also expanded by 0.7 percent, beating economists’ forecast of 0.4 percent.
Other data showed strength in the U.S. economy. The final GDP reading for the first quarter came in at 2.1 percent, significantly better than the intermediate figure of 1.6 percent. Initial claims for unemployment benefits in the most recent week fell to 215,000, about 12,000 less than the week before and well below the 223,000 economists had expected.
TREND FORECAST:
Inflation will be somewhat lower in coming months since oil prices have declined to pre-war levels. What may push oil prices up a bit is that business and governments will need to rebuild their reserves that have been wiped out since the Iran War began, and knowing that there is no real peace deal, others will prepare for what they assume will eventually be some other crisis that curtails the supply.
The U.S. economy’s relative strength compared to that of other nations will help keep the economy from sinking into recession. However, as we have reported, the jobs being created are in the low-paying health, human services, and hospitality sectors. That will give the Fed room to raise its interest rate in September, which it now seems almost certain to do. But again, President Trump will do all he can to keep interest rates down in the run-up to the mid-term elections.
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