Inflation Started to Decline
What is it?
Inflation finally printed a lower measure after months of speculation on when it would happen.
“The US Dollar Index (DXY), which tracks the greenback’s performance against a basket of six major currencies, lost more than 1% on Wednesday after the data from the US showed that annual inflation declined to 8.5% in July from 9.1% in June.”*
Why does it matter?
“Commenting on the inflation data, Chicago Fed President Charles Evans said that they were not finished with rate hikes. On a similar note, Minneapolis Fed President Neel Kashkari and San Francisco Fed President Mary Daly both argued that it was too early to declare victory on inflation. According to the CME Group FedWatch Tool, markets are pricing in a 56% probability of the Fed opting for a 50 basis points rate hike in September.”*
We are not here to predict when inflation will peak. What we do know is that we have a plan in place to invest accordingly under various market conditions. CPI can be used as a measure like the Fed’s decisions to raise interest rates. However, those metrics alone will not influence investment decisions. Investment performance and investor sentiment are more important than estimating a data point for CPI or Fed decisions.
Crypto Finds Relief in the Rally
What is it?
After falling from historic highs months ago, some cryptocurrencies have gained positive momentum.
“Bitcoin benefited from the risk-positive market environment and gained nearly 4% on Wednesday. BTC/USD pushes higher toward $25,000 and early Thursday.”*
“Ethereum is trading at its highest level in two months and closes in on $2,000.”*
As more crypto-related assets appreciate, we will add available cash to those positions.
Why does it matter?
Cryptocurrencies are becoming established as a suitable asset class for some. As we continue to develop and grow our investment models, we have created a Tactical Crypto model that invests in trusts or ETFs derived from Cryptocurrencies.
Are you interested in adding this as a part of your portfolio? Let’s talk soon to see if this would be suitable for you.
Other articles we found interesting this week:
How ‘shrinkflation’ amid rising food prices is ‘just like a magic show’: Expert
Copper speculators anticipate downturn for market and the world
Elon Musk Says Lithium Demand Will Continue to Boom
Current 401(k) portfolio
Our last portfolio reallocation: 5/19/2022.
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The weekly market insight provides a window into the process we use in our investment management process. At Breakaway, we believe markets are always changing and require a nimble yet data-oriented approach.
Our process attempts to identify trends and momentum in the financial markets. With that information, we align our clients’ portfolio accordingly in the hope to help our clients accomplish their life goals while attempting to lower the risk of a large drop in their portfolio.
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Sources:
*Eren Sengezer. “CPI-inspired dollar selloff pauses ahead of mid-tier data”. FX Street. 8/11/2022. https://www.fxstreet.com/news/forex-today-cpi-inspired-dollar-selloff-pauses-ahead-of-mid-tier-data-202208110659
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