U.S. equities ended last week at all-time highs as the economic recovery continued to gain momentum. The June employment report showed that the economy added 850,000 new jobs for the month and that more workers were returning to the labor force.
Inflation continues to be the biggest short-term concern for the economy and markets. Meanwhile, oil prices continue to rise and now stand at more than $75 per barrel, a six-year high. The breakdown of OPEC+ talks increases the risk that prices could push higher as demand continues to rebound, with $100-per-barrel prices not out of the question later this year. Despite the pressure on oil and other commodity prices, Treasury yields remain very stable and at their lowest levels since the first quarter of this year.
My expectation for the market remains the same: that equities will continue to grind higher and yields will be stable until monetary and fiscal stimulus is reduced, which likely won’t happen until late in 2021.
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