Rates Fall on Better Inflation Data

June 17, 2024

Rates Fall on Better Inflation Data Photo

During his post-meeting press conference last Wednesday, Federal Reserve (Fed) Chair Powell signaled policymakers need “more confidence that inflation is moving back down to 2%” to start lowering interest rates.1 The more “hawkish” posture by Fed policymakers — including just one rate cut projected for the remainder of the year — failed to deter investors who focused more on the improving inflation data.2 Last week’s Consumer Price Index (CPI) and Producer Price Index (PPI) reports came in below projections, helping to ease the fears that the recent uptick in inflation may signal more trouble ahead.3

The bond market put a September rate cut back on the table while the 10-year Treasury yield closed below 4.25% for the first time since March.4 The S&P 500 Index gained 1.6% for the week, with large-cap technology names continuing to lead the way.5 Nvidia, Microsoft and Alphabet all reached record high territory by the week’s end.6

Economic data during the holiday-shortened week includes retail sales and industrial production on Tuesday, housing starts on Thursday and existing home sales out Friday.7



1Board of Governors of the Federal Reserve System – Transcript of Chair Powell’s Press Conference June 12, 2024; 6/12/24

2The New York Times – Fed Keeps Rates Steady and Forecasts Only One Cut This Year; 6/12/24

3T.Rowe Price – Global markets weekly update; 6/14/24

4U.S. Department of the Treasury – Daily Treasury Par Yield Curve Rates; as of 6/14/24

5,6CNBC – Nasdaq Composite ekes out fifth straight record close, notches a 3% weekly gain; 6/14/24

7MarketWatch – U.S. Economic Calendar; as of 6/17/24

Tags: Inflation | Federal Reserve | Interest rates | Economic data | Monetary policy

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