By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- Inflation remains front and center for the markets and this week both the CPI and PPI reports will be released prior to the Fed’s announcement on interest rates. CPI will be released Tuesday morning and overall CPI is expected to fall to 4.1% (from 4.9% last month) on a year-over-year basis and core CPI (excluding food and energy) is expected up 5.2% from the same period last year. Inflation continues to decline but remains well above the Fed’s long-run target.
- Both the Federal Open Market Committee and the European Central Bank (ECB) meet this week and decide on interest rate policy. After raising the target Fed funds rate at 10 consecutive meetings (dating back to last March), the Fed is expected to pause this week, while indicating they remain vigilant on inflation. The ECB has been less aggressive than the Fed in raising rates (to date) and is expected to hike 25 basis points on Thursday. Target policy rates currently stand at 5.25% and 3.75% for the Fed and E, B, respectively.
- Market optimism remains high with the S&P 500 up more than 20% from its October lows and over 12% this year. The index has been gaining steam in recent sessions and participants are anxiously awaiting the minefield of the inflation reports and central bank meetings to see if the strength will continue and participation broaden out.
Three Things to Know
- According to the Federal Reserve Bank of New York, consumers now owe a record $988 billion on their credit cards, up 17% from a year earlier, or about $5,700 per person. (Source: Seeking Alpha)
- Equally weighted, the seven-largest stocks in the S&P 500 in aggregate are up over 61% year-to- date versus a 12% gain for the index as a whole. (Source: Benjamin F. Edwards)
- At 36 years old, Novak Djokovic became the oldest man to win tennis’ French Open title and won a record 23rd grand slam event. He now holds the most grand slam titles of any man in history and is one behind the all-time leader, Margaret Court. (Source: ESPN)
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.