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Inflation Cools: June CPI Drops, Core Rate Eases to 3.3% Year-over-Year

CPI continues to cool in June, with core Y/Y rate easing to +3.3%

  • June Consumer Price Index: -0.1% M/M vs. +0.1% expected and 0.0% in May.
  • +3.0% Y/Y vs. +3.1% expected and +3.3% prior.
  • Core CPI (excludes food and energy): +0.1% M/M vs. +0.2% expected and +0.2% prior.
  • +3.3% Y/Y vs. 3.5% expected and +3.4% prior.

The 10-year yield has dropped to 4.27% and S&P 500 futures are up 0.3%.

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Market Outlook

Title: PCE for May 2024

Headline, core PCE inflation ease in May, as expected

Headline – May PCE Price Index: +0.0% M/M vs. +0.0% consensus and +0.3% in April.

+2.6% Y/Y vs. +2.6% expected and +2.7% prior.

Core – PCE Price Index: +0.1% vs. +0.1% expected and +0.3% prior (revised from +0.2%).

+2.6% Y/Y vs. +2.6% expected and +2.8% prior.

10-year treasury yield lower at 4.276%

S&P 500 Futures up 0.4%

Breadth in the market was better the past few days, hopefully with these inflation numbers the broader rally should continue.

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Market Outlook

May’s CPI cools more than expected, with core CPI rising 3.4% Y/Y

  • May Consumer Price Index: 0.0% vs. +0.1% expected and +0.3% in April.
  • +3.3% Y/Y vs. +3.4% expected and +3.4% prior.
  • Core CPI: +0.2% vs. +0.3% expected and +0.3% prior.
  • +3.4% Y/Y vs. +3.5% expected and +3.6% in April.

These are better than expected numbers and Futures are up 0.7% and the 10 year treasury is down 14 basis points to 4.3%

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Market Outlook

 Fed Officials Dial Back Rate Forecasts, Signal Just One ’24 Cut

Officials acknowledge ‘modest further progress’ on prices

Fed boosts estimate of long-run neutral rate further

Federal Reserve officials penciled in just one interest-rate cut this year and forecast more cuts for 2025, reinforcing policymakers’ calls to keep borrowing costs high for longer to suppress inflation.

They now see four cuts in 2025, more than the three previously outlined.

The Federal Open Market Committee adjusted language in its post-meeting statement released Wednesday, noting there has been “modest further progress toward the committee’s 2% inflation objective” in recent months. Previously, the statement pointed to a “lack” of further progress.

The S&P is still up 0.96% and the 10 year is at 4.29% – no major reaction.

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Market Outlook

CPI inflation stays hot in March

CPI inflation stays hot in March

  • March Consumer Price Index: +0.4% vs. +0.3% expected and +0.4% prior.
  • +3.5% Y/Y vs. +3.5% expected and +3.2% prior.
  • Core CPI: +0.4% vs. +0.3% expected and +0.4% prior.
  • +3.8% Y/Y vs. +3.7% expected and +3.8% prior.
  • That translates to a 3.8% increase over the past 12 months, topping the 3.7% increase expected and keeping the same pace as in February, the U.S. Department of Labor said.
  • Shelter and gas combined contributed over half of the overall monthly increase.
  • Treasury 10-year yields rose 10 basis points to around 4.45%, 

The S&P 500 Futures are down 1.45%