In recent weeks, markets absorbed a lot of news pertaining to both sides of the Fed’s mandate, full employment andinflation. In June, payroll job growth declined, the unemployment rate ticked down from 3.7% to 3.6% and wagegrowth remained at 4.4% y/y, neither adding to, nor diminishing, fears of wage inflation.… Read More
June’s CPI report showed gathering disinflation with headline CPI rising 0.2% m/m and 3.1% y/y on a seasonallyadjusted basis, well below peak inflation of 8.9% y/y a year ago. This trend is not unique to the U.S.: the OECD reportedsoftening inflation in most major economies to 6.5% y/y in May, the lowest level for global inflation since December2021.… Read More
The U.S. economy has proven to be more resilient in 1H23 than many expected, as strength in the labor market hashelped support consumption. But how much momentum does that labor market have? This week’s chart looks toquantify labor market momentum in one number by analyzing seven key indicators: private payrolls, average hourlyearnings, the US Composite PMI Employment Index, the Conference Board Labor Differential Index, initial joblessclaims, job openings and the unemployment rate.… Read More
Stocks and bonds have had a strong start to the year due to resilient economic data, a bounce back in profit marginsand a moderation in the market’s expectations for interest rates. That being said, while stocks and bonds haveimproved from their lows of 2022, commodities finished 1H23 down due to cooling energy prices and weakeningglobal manufacturing demand.… Read More
Last week, investors parsed a slew of forward-looking data as they work to gauge the probability of a near-term recession. The Conference Board Leading Economic Index (LEI), a bellwether of economic health, took center stage, andrevealed a continued divergence between the economy and financial markets.… Read More
Last week, the Federal Reserve opted to keep the federal funds rate unchanged but hawkish messaging left the dooropen for further tightening in the coming months. In the Fed’s defense, economic growth has so far been resilient,suggesting the economy may be able to weather tighter conditions for longer.… Read More
On Wednesday, the Fed should provide more clarity on the trajectory of rates after vacillation in market expectationsover the past month, which we illustrate in this week’s chart. As of Friday, the federal funds futures market was pricing ina 28% probability of a hike in June and a 54% chance of a skip in June followed by a hike in July.… Read More
Last week, investors received a large bundle of data related to the jobs market. There is some indication of futureweakness, but overall the jobs data mosaic points to normalization at a gradual pace. The May employment reportshowed a net creation of 339,000 jobs, above expectations and an uptick compared to April’s 264,000.… Read More
10-year Treasury yields have climbed by roughly 38bps to 3.80% in May, their highest level since SVB collapsed,reflecting the market’s improved optimism for economic growth and shifting expectations for monetary policy.
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Despite slower economic growth, 1Q23 S&P 500 earnings have surprised to the upside, as economic momentum atthe beginning of the year supported an expansion in profit margins. With over 90% of the S&P 500’smarket cap havingreported, profit margins currently stand at 11.8%, a level of profitability that had only been eclipsed once in the pre pandemic period.… Read More
In recent weeks, markets absorbed a lot of news pertaining to both sides of the Fed’s mandate, full employment andinflation. In June, payroll job growth declined, the unemployment rate ticked down from 3.7% to 3.6% and wagegrowth remained at 4.4% y/y, neither adding to, nor diminishing, fears of wage inflation.… Read More