As the Federal Reserve's Open Markets Committee meets this week, they're widely expected to keep interest rates at the 20+ year highs that they are at today. And there is evidence that the higher rates have slowed hiring in recent months.
But that doesn't mean INFLATION WATCH has ended for some. And last week's reports had a reversal of what had been a good trend when it came to price growth.
Uh oh! Largest one-month inflation in over a year? That's not good. But that second graph explains why - a jump in gasoline prices which has not continued in September. And according to AAA, prices have even dropped in Wisconsin vs where we were a month ago.
But the oil markets are sending a signal that
prices may head back up in the near future. Oil prices rose to 10-month highs on Tuesday before easing, as investors took profits following three sessions of gains that followed extended production cuts from Saudi Arabia and Russia.
Global benchmark Brent crude futures settled 9 cents lower at $94.34 a barrel. Earlier, it hit a session peak of $95.96 a barrel, their highest since November.....
Feeding supply concerns, OPEC+ members Saudi Arabia and Russia this month extended combined supply cuts of 1.3 million barrels per day (bpd) to the end of the year.
However, the
sabotage supply reductions from the Saudis and the Russians may not have as large as effect on supplies as it may have in 2021 or early 2022. That's because Americans continue to lower their gasoline usage, with early September consumption being well below the pre-COVID levels, and from 2021.
And that means gasoline continues to be as available as it's been in most non-COVID years in this country.
Combined with a still-strong dollar, and that doesn't add up to any reason to fear a gas spike. Well, barring fishy trading and profiteering, I suppose.
Hopefully, the Fed says that they see we are continuing on our new normal of near-4% unemployment and 3-4% inflation, and that they recognize this is a good thing in the real economy. But you can bet Wall Streeters are going to be parsing every word tomorrow and projecting their hopes/fears onto the stock and commodity markets, which affect most of the rest of us.
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