US June Inflation 3% Pushes Markets Up

On Wednesday, the U.S. Bureau of Labor Statistics published Consumer Prices Index (CPI) inflation for June 2023 at 3% pa, down from 4% pa in May 2023.  This boosted consumer confidence and with banks and investment groups reporting increased profits, sent markets upwards around the globe.  That said, may be confidence is higher than it should be as when the Bureau of Labor Statistics seasonally adjusts inflation it is actually up 0.2% pa.

We suggest this will mean the Federal Reserve will still increase interest rates on 25/26 July.

That said, we do believe that the UK and Europe’s inflation rates will also start to soften through the summer.  As well as the Federal Reserve forecast to increase interest rates, we still expect the Bank of England and the European Central Bank to increase interest rates by at least another two consecutive 0.25% pa increases by September.  Many are forecasting rates between 6.5% pa and 7.0% pa in the UK by the end of the year.

We still believe that new stock market records will be hit over the coming couple of years and there is plenty of room in some markets when you look at where markets closed this evening compared to their record highs.

As you can see, with the exception of the German DAX, most indices that we track have some room to grow before hitting record highs.  We expect the West to set new records and whilst we do not see the Far East getting near their heady highs from a few years ago, we forecast significant growth.

Expect more interest rate rises, inflation then to fall back and stock markets to power up ahead of interest rates finally starting to fall.  It happened in the 1980s,we forecast it will happen again.