FEATURED MARKET DATA
Soft Landing Narrative Returns
While the first quarter brought stronger than expected inflation and growth, economic data cooled in the second quarter. Core month-over-month CPI rose a faster than expected 0.4% in each of the first three months of the year but slowed to 0.3% and 0.2% in April and May, respectively. Core PCE, the Fed’s preferred measure of inflation, slowed even more to 0.1% in May.
by Laura Fox FEATURED MARKET DATA
Corporate Earnings Support Markets
With the first quarter corporate earnings season complete, S&P 500 companies reported a blended growth rate of 5.9%. The level was well ahead of market expectations and the strongest since the first quarter of 2022. The breadth of earnings beats was also strong, with the percentage of companies exceeding earnings growth expectations above average.
by Laura Fox FEATURED MARKET DATA
A Mixed Bag of Data
Inflation, employment and GDP growth data received in April all contributed to declines in stock and bond prices. During April, Fedspeak focused on patience with respect to a potential rate cut. In his press conference following the May 1, 2024, FOMC meeting, Federal Reserve Chairman Powell noted a “lack of further progress” regarding inflation data, while reiterating that policy remains sufficiently restrictive.
by Laura Fox FEATURED MARKET DATA
Core Inflation Moderating
Though the path to lower inflation has been somewhat bumpy, the trend in Core PCE (Personal Consumption Expenditures), the Fed’s preferred measure of inflation, continues downward. Year-over-year growth in Core PCE declined to 2.8% in February.
by Laura Fox FEATURED MARKET DATA
Economic Growth Propels Stocks
Strong economic data helped lift the S&P 500 by 5.17% in February as markets also priced in a Federal Reserve that may be slower to cut rates. The Citi Surprise Index, which compares forecasted economic data to reported data, rose in early February on higher employment and inflation data.
by Laura Fox FEATURED MARKET DATA
Economic Growth Continues
The Federal Reserve referenced the “evolving” economic outlook in a statement following its January 31st meeting in a nod to stronger growth and the potential impact on the path of interest rates. Prior to the meeting, the Bureau of Economic Analysis announced the “advance” estimate of GDP increased at an annual rate of 3.3% in the fourth quarter of 2023.
by Laura Fox FEATURED MARKET DATA
Markets Rally on Dovish Fed
Stocks and bonds continued to rally in December resulting in strong returns for equity and fixed income markets in 2023. Favorable economic data increased expectations in early December that the Fed would begin to pivot toward lower rates. Fed officials confirmed this at the December Fed meeting as the Summary of Economic Projections showed three 0.25% rate cuts expected in 2024.
by Laura Fox FEATURED MARKET DATA
Bonds Break Out
In November 2023, the Bloomberg Aggregate Index posted its strongest monthly total return since 1985. The 2-year Treasury yield ended the month at 4.70%, hitting its lowest level since mid-July. The 10-year Treasury yield ended the month at 4.34% after rising above 5.00% in October. A lower than-expected inflation print of 3.2% sparked a rally across Wall Street, with traders largely removing potential Federal Reserve rate hikes from their forecasts.
by Matt Orseske FEATURED MARKET DATA
Earnings Forecasts Down
More than 55% of S&P 500 companies reported third quarter earnings through October 31st, with the blended (actual plus estimates) earnings growth rate of 2.8% outpacing expectations for a decline of 0.3%. However, the magnitude of positive earnings surprises has so far run below five-year averages. Another trend in the third quarter is the slower blended year-over-year revenue growth rate of 2.1% compared to the 10-year average of 5.0%.
by Laura Fox FEATURED MARKET DATA
Why are Treasury Yields Rising?
The 5-Year U.S. Treasury yield rose about 0.35% in September. Inflation expectations, as represented by the Break even yield, rose only 0.08%. The difference between these two measures is the Real yield on Treasury Inflation Protected Securities (TIPS). With inflation expectations gradually declining over the past year, there is another reason for the rise in Treasury yields.
by Laura Fox 