The bond market rallied as the inflation data met expectations, but mega sized tech at one time declined about 2% before a late day surge. As noted last week, during the month of May mega cap shares advanced as Treasuries swooned, the inverse of the expectations.
Overnight index swap contracts tied to upcoming Fed policy meetings continue to fully price in a quarter point rate cut in December, with the odds of a move as soon as September edging up to around 50%. For all of 2024, the contracts imply a total of 34 bps of rate reductions.
While the inflation data met expectations, inflation as measured by the core PCE or the Federal Reserve preferred measure, is still 40% higher than the 2% speed limit.
In perhaps a change of forecasts, the Cleveland Fed is now suggesting that inflation may not return to 2% until mid-2027.
What will occur in this data filled week? It is comprised of several top tier data points including the ISM Manufacturing and Service Sector Indices, the JOLTS Job Openings data, trade gap several manufacturing surveys and the all-encompassing BLS labor report.
Last night the foreign markets were up. London was up 0.12%, Paris up 0.40% and Frankfurt up 0.75%. China was down 0.27%, Japan up 1.14% and Hang Seng up 1.79%.
Dow and NASDAQ futures are up 0.1% and 0.35% as Bloomberg writes “Big tech is primed for gains after a three day slump,” not offering any catalyst for an advance other than a rebound from last week’s minor selloff. The 10-year is up 8/32 to yield 4.47%.
A BIG DATA WEEK
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
