The latest Consumer Price Index (CPI) numbers were released showing the CPI up 0.2% in July from the previous month.  Year-over-year, the CPI is up 2.9%.

The more stable median CPI also was up 0.2% from the previous month, and the year-over-year median CPI is holding steady at 2.8%.

While these are not the exact metrics used by the Fed, there has to be a little concern over the uptick in consumer price inflation.  It would be nice if the Fed would at least acknowledge that the CPI numbers are running over its 2% target, and have been for some time now.

If you get a 3% raise at your job, then you really are getting no raise at all.  Actually, it is probably worse than that because you owe additional taxes on that 3%, so your after-tax raise is lower than the inflation rate.  Actually, it is even worse than that because your health insurance premiums are probably going up by 20% per year, which you could say tends to be underweighted in the CPI calculations.

With the release of the CPI numbers, stocks fell hard on Friday.  But the reason – at least according to the financial news media – wasn’t because of the CPI numbers.  Stocks fell because Turkey’s currency (the lira) dropped significantly.  I am still trying to figure out how a country with a GDP of well under $1 trillion annually can rattle US markets so much.  Maybe sellers were just looking for an excuse to sell.

But perhaps the most significant, and possibly overlooked, news of the day in the world of finance came in Treasury yields.  The 10-year yield closed at 2.87% when it was sitting at 3% at the beginning of the month.  Meanwhile the 3-month yield closed at 2.05%, whereas it started at 2.03% at the beginning of August.

In a week and a half, the 3-month yield rose 0.02%, while the 10-year yield fell by 0.13%.  While these aren’t massive changes, it still points to a continually flattening yield curve.  The flattening is slow, but it is still happening.  And if you have been reading my posts, then you know I see this as the number one warning indicator of a coming recession.

To wrap up the latest financial news, gold has still been struggling along.  It is currently trading for around $1,220 per ounce.  Gold investors have certainly seen better days.  But then again, consider that the US dollar has been relatively strong recently.  European investors in gold who trade in euros have fared a little bit better.

There just isn’t much enthusiasm for gold right now except for a few central banks.  Even gold bugs have been relatively quiet.

But we have to remind ourselves that gold is there as a hedge against risk and currency depreciation.  It is something of an insurance policy.  And when things start to get rocky out there again, then gold will have its day in the spotlight again.

We have to be patient as investors, and we also can’t get greedy by running into the bubbles.  Things usually take longer to play out than expected.  I certainly never expected the economy to hold up for nearly 10 years after the financial crisis in 2008.  You have to wonder if we are just being set up for that much of a harder fall in the future.