Financial markets continued to recover last week as investors remain eager to embrace the idea of Federal Reserve (Fed) interest rate cuts arriving this year. An uptick in initial jobless claims and a steep decline in the University of Michigan Consumer Sentiment Index helped to renew optimism that monetary easing will begin soon.1,2 The bond market also passed a critical test last week with $125 billion of Treasury issuance concluding with strong results for the 30-year bond auction.3
Inflation data headlines this week’s economic calendar with the Producer Price Index (PPI) out Tuesday followed by the Consumer Price Index (CPI) Wednesday.4 The Fed and investors will be looking for better numbers this week after generally disappointing inflation readings during the first quarter. April Retail Sales out Wednesday and earnings from Home Depot and Walmart will provide another fresh look on the state of the U.S. consumer.5,6
Sources:
1Reuters – US weekly jobless claims highest in more than eight months as labor market eases; 5/9/24
2Yahoo! Finance – Consumer Sentiment Falls In May, Inflation Expectations Strongly Exceed Fed's 2% Goal: 'They Now Perceive Negative Developments'; 5/10/24
3Yahoo! Finance – TREASURIES-Yields ease on solid demand at Treasury bond auction; 5/9/24
4,5MarketWatch – U.S. Economic Calendar; as of 5/13/24
6Morningstar – Big retailers report as Q1 earnings wind down. This company has been the biggest drag on the S&P 500's results; 5/12/24
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