Chief Economist Scott Brown discusses the latest market data.
The Consumer Price Index rose 0.6% in May (+5.0% y/y, vs. +0.1% y/y in May 2020), up 0.7% ex-food & energy (+3.8% y/y, vs. +1.2% in May 2020). The increase was more than expected but continued to reflect base effects (a rebound from the low levels of a year ago), restart pressures and another pop in the price of used vehicles (+7.3%, following +10.0% in April). Half of the May increase in the headline CPI was in prices of new vehicles, used vehicles, car insurance and vehicle rentals. Despite the second upside surprise in the monthly CPI data, bond yields settled lower.
The Job Opening and Labor Turnover Survey (JOLTS) results for April showed a further surge in job openings (9.29 million overall, 8.37 million for the private sector). Quit rates rose to a record high, consistent with a strengthening labor market.
Next week, the focus will be on the Fed policy meeting. No change in short-term interest rates or the monthly pace of asset purchases is expected. Officials will update their projections of growth, unemployment and inflation. We’ll get a new dot plot, which should signal that some Fed officials expect to increase rates sooner than what they had expected in March (when 11 of 18 saw no rate increase before 2024).
|Last||Last Week||YTD return %|
Consumer Money Rates
|Last||1 year ago|
|Last||1 year ago|
|Dollars per British Pound||1.4146||1.260|
|Dollars per Euro||1.2135||1.338|
|Japanese Yen per Dollar||109.60||109.15|
|Canadian Dollars per Dollar||1.211||1.350|
|Mexican Peso per Dollar||20.011||21.917|
|Last||1 year ago|
|Last||1 month ago|
|10-year municipal (TEY)||1.35||1.52|
Treasury Yield Curve – 06/11/2021
As of close of business 06/10/2021
S&P Sector Performance (YTD) – 06/11/2021
|June 15||—||Producer Price Index (May)|
|—||Retail Sales (May)|
|—||Industrial Production (May)|
|—||Homebuilder Sentiment (June)|
|June 16||—||Input Prices (April)|
|—||Building Permits, Housing Starts (May)|
|—||FOMC Policy Decision|
|—||Powell Press Conference|
|June 17||—||Jobless Claims (week ending June 12)|
|—||Leading Economic Indicators (May)|
|June 24||—||Durable Goods Orders (May)|
|July 2||—||Employment Report (June)|
|July 5||—||Independence Day Holiday, observed (markets closed)|
|July 28||—||FOMC Policy Decision|
All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. and are subject to change. There is no assurance any of the forecasts mentioned will occur or that any trends mentioned will continue in the future. Investing involves risks including the possible loss of capital. Past performance is not a guarantee of future results. International investing is subject to additional risks such as currency fluctuations, different financial accounting standards by country, and possible political and economic risks, which may be greater in emerging markets. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, and state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Municipal bonds may be subject to capital gains taxes if sold or redeemed at a profit. Taxable Equivalent Yield (TEY) assumes a 35% tax rate.
The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, Far East) index is an unmanaged index that is generally considered representative of the international stock market. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks. An investment cannot be made directly in these indexes. The performance noted does not include fees or charges, which would reduce an investor’s returns. U.S. government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.
Commodities trading is generally considered speculative because of the significant potential for investment loss. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Specific sector investing can be subject to different and greater risks than more diversified investments. Gross Domestic Product (GDP) is the annual total market value of all final goods and services produced domestically by the U.S. The federal funds rate (“Fed Funds”) is the interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. Material prepared by Raymond James for use by financial advisors. Data source: Bloomberg, as of close of business June 10, 2021.