With all the talk about economic uncertainty in the United States, and the Federal Reserve’s hesitation to hike up interest rates again, there is an undercurrent that many consumers are not missing, although a lot of short term traders are. This is the fact that consumer prices are rising modestly. Over the month of June, this trend continued. The price of gasoline at the pump rose slightly all across the nation, as did many other aspects of the economy. It stands to reason that sales in the United States are on the rise as a result of this, helping to bolster up the numbers of many major retail companies in the U.S.
This doesn’t necessarily translate into rising stock prices, but in many cases it will. As a trader, being aware of which companies are going to benefit from this trend, and which will not, is important. Gas prices have risen, and although crude is rising too, it is not rising at the same rate. This means that many of the major oil companies, such as Exxon and BP, are likely to see price gains when it comes to their stocks.
The so-called Brexit has also taken a toll on the economy. This impact should be minimal upon the United States, but it has shaken investor and trader confidence, so prices naturally dropped as a result. Now that the shockwaves seem to have subsided, the Brexit shouldn’t be a major influence on the U.S. stock market. Of course, pay attention to trends in your charts and read the news and blogs so you have a better idea of how it might be impacting your specific trading strategy. For the most part though, the dips have appeared to cease, giving retail businesses even more of an opportunity to start raising prices again. If consumers are willing to spend, prices will go up. And this is exactly what happens when confidence increases.
It’s important to remember that the Fed has set an inflation target goal of 2 percent per year for the U.S. economy, and even with June’s slight rise in prices, inflation is hovering at around 1 percent right now. The rate of change that is occurring would set up the U.S. for a less than 2 percent growth for the 2016 year when it comes to the inflation rate, which is just slightly behind the desired schedule. The next Fed meeting is scheduled for toward the end of July, and it isn’t clear whether or not this evidence is strong enough, on its own to sway the Fed. If other factors are well ahead of schedule, this is something that might be overlooked. If other factors are borderline or behind schedule, then it is unlikely that the Fed will be raising rates in a few weeks. Either way, binary options traders should be paying attention to these developments so that they can have a better understanding of what will happen, and whether or not it will end up impacting their trades.
Not all commodities are rising in price. Gas is up 3.3 percent, but food prices have dropped. The price of new cars and trucks fell again, too, totaling about 3.1 percent over the past 12 months. The price of clothing fell by 0.4 percent. Again, look at the assets that you typically trade and see how the companies or commodities that you focus on fit into these categories. Just because consumer prices are up overall doesn’t mean that every company or even every sector will be impacted equally.