It’s been a pedestrian session thus far with positive market breadth but a cautious tone.  I suspect much of this is just summertime trading. 

On that note, lots of focus on the Federal Reserve, which has worked hard to temper expectations of a 50-basis point rate cut after making it clear rate cuts are on the way.

This makes this morning’s report on consumer sentiment even more intriguing.

Sentiment index 98.4 +0.2% from June and near upper end of 30-month range (91.2 to 101.4)

• Inflation year ahead slightly lower
• Inflation long term near top of range recent years

This is very interesting and will help form opinion at the Fed.  The higher respondents expected inflation over the next year to lower consumer confidence expectations, but also people see higher unemployment rates.  The University of Michigan says this is a sign American consumer might be expecting stagflation.

I bet the Fed already knows this, which is another reason they must be considering strong preemptive action.

Have a great weekend!