By Bill Hornbarger, Chief Investment Officer
Three Things to Watch
- Inflation and trade will be front and center this week. On Monday, the United States and China will resume trade talks in London. Attendees include the Chinese Vice Premiere as well as the U.S. Treasury and Commerce secretaries. The last round of discussions in May resulted in a surprising temporary pause in the ongoing trade war, one of the factors behind the better mood in the equity markets.
- On Wednesday, the Consumer Price Index (CPI) report for May will be released. Inflation is expected to tick up to a four-month high based on spillover from tariffs. Overall CPI is expected up 2.5% (year-over-year), and core CPI is forecast to increase 2.9% from a year ago. Those readings would do little to sway the consensus of the U.S. Federal Reserve heading into next week’s meeting, where rates are widely expected to stay unchanged.
- Also, on the calendar this week will be the University of Michigan sentiment data and small business optimism. Both business and consumer sentiment have been declining on the uncertainty surrounding global trade.
Three Things to Know
- Federal funds futures are currently pricing for two quarter-point cuts to the target fed funds rate this year. (Source: Bloomberg)
- The S&P 500 has rallied more than 20% after hitting the 2025 lows on April 8. The index is up 2% for the calendar year. (Source: Bloomberg)
- The S&P 500 just closed up more than 20% from the April 8 near-bear-market low. Looking at the previous 17 bear or near-bear markets shows that once stocks are up 20% off those lows, they were higher a year later 16 out of 17 times. (Source: Ryan Detrick)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.