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DECEMBER 12, 2023

SLIGHT INCREASE IN CONSUMER PRICES

The consumer price index (CPI) in November recorded a slight uptick of 0.1% from the previous month, falling short of the anticipated 3.1% increase from a year earlier. This suggests a small slowdown in inflation, particularly as energy prices experienced a significant drop of 2.3%, which offset the overall inflation rate. In addition, core prices, which exclude volatile food and gas costs, displayed a 4.0% year-on-year increase, indicating a moderate deceleration compared to October’s 3.2% annual rise. Economists had anticipated no change in monthly core prices and a 3.2% annual rise, and the decrease in energy prices, driven by a 6.0% reduction in gas prices, contributed to the moderation in headline inflation. Moreover, monthly core prices showed a 0.3% increase, which was slightly higher than the 0.2% rise in October, highlighting a lower-than-expected inflation trend. Furthermore, despite the modest rise in consumer prices, the latest report suggests a potential easing of inflationary pressures, providing optimism for a more moderate inflation trend in the near future.

POSSIBLE VOLATILITY AHEAD

Bitcoin’s price has hovered this morning near $42,000 after the recent setback it experienced, in which it dropped by nearly 8% in value. This decline, the largest in three days since mid-August, also affected other cryptocurrencies, and sparked concerns of increased volatility in the coming months. Some attributed this decline to investors trimming their positions before a Federal Reserve meeting, while others saw it as a natural correction after Bitcoin’s 152% increase this year. Nonetheless, despite the setback it is worth highlighting that the possibility of the first U.S. spot Bitcoin exchange-traded funds being approved and the upcoming Bitcoin halving in 2024 are creating optimism in the market. Moreover, although the recent dip led to significant profit-taking, some investors viewed it as a buying opportunity. In Addition, as of 8:00 AM CST, the sentiment in the crypto market is positive with Bitcoin and other cryptocurrencies like BNB and Avalanche showing an upward movement.

EXPERTS FORESEE STEADY RATES

Wall Street economists are predicting that the Federal Reserve will maintain its current interest rates due to a slowdown in job growth and cooling inflation. There is a possibility that the Fed might start reducing its benchmark rate as early as 2024. Federal Reserve Chairman Jerome Powell has refrained from confirming the bank’s future decisions. He did mention that consumer prices, excluding volatile food and energy costs, have increased by 2.5% annually over the last six months, slightly higher than the Fed’s 2% inflation target. Jamie Cox, managing partner for Harris Financial Group, believes that the Fed concluded rate hikes months ago, although they have not disclosed this to the markets. Consequently, financial experts recommend individuals take advantage of the current higher interest rates by investing in longer-term certificates of deposit (CDs) and high-yield savings accounts. With predictions of steady Fed rates for several months and potential rate cuts in 2024, it is advised that consumers secure beneficial interest rates now, particularly on longer-term options, given the potential for diminished rates in the future.

CONSIDERATIONS FOR TAX FILLING

As the 2023 tax filing season approaches, the Internal Revenue Service (IRS) has issued guidance urging taxpayers to begin preparing early and gain a comprehensive understanding of the various factors that can influence their tax refunds. It is advisable to use the IRS Online Account for efficiently managing tax-related transactions and to be well-informed about the timing of refund disbursements. Additionally, maintaining meticulous records of income and digital asset transactions is important, as is staying abreast of any alterations in reporting thresholds such as those for the 1099-K form. Moreover, taxpayers should consider their eligibility for tax credits relating to electric and clean vehicles, as well as residential energy credits. Furthermore, it is important to remark that taxpayers claiming certain credits may have to wait until mid-February for their refunds, and the last quarterly payment for 2023 taxes is due on January 16, 2024.

INTERNATIONAL NEWS

U.K. wage growth has slowed significantly, with earnings excluding bonuses growing by 7.3% in the three months leading up to October, marking a notable decline from the 7.8% growth recorded in the previous period. This serves as a clear indication of a labor market that is cooling off in response to the sluggish economy. The Bank of England’s proactive approach to controlling inflation, which has involved implementing aggressive interest rate increases, may need rate cuts if this trend of wage growth persists. Despite signs of easing pay pressure, the labor market still remains tight, with nearly a million job vacancies continuing to be available. However, the reliability of U.K. labor market statistics has come into question recently, with the Bank of England relying on a range of indicators to assess just how quickly the labor market is slackening. Moreover, even amidst the overall cooling of the labor market, employment has remained steady and there are promising indications for household finances, as regular real pay has experienced its fastest increase in just over two years.

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