Economy
Inflation rose by 0.1% last month, less than the expected increase of 0.2%. Core inflation (which excludes food and energy prices) also rose by just 0.1% compared to forecasts of a 0.3% increase. These readings are a positive development, but some economists are still forecasting higher inflation in the coming months as a result of the recently implemented tariffs. It is because of these concerns that the Fed has yet to cut interest rates this year. The Federal Open Market Committee will meet this week on Wednesday and is likely to announce no change in its overnight interest rate. The next opportunity they would have to make a rate cut would be at the end of July, but the market is not pricing in any rate cuts until the mid-September meeting, according to the CME FedWatch Tool.
Markets
The market was headed for another positive week before Thursday nights developments between Israel and Iran caused oil prices to spike higher and stocks to sell off. For the week, the S&P 500 headed lower by 0.39%. We wrote a few weeks ago that the month of June can see stocks driven less by corporate earnings and more by geopolitical and macroeconomic headlines, and that's what we've seen so far. We're still a few weeks away from earnings season kicking off with plenty of economic data to be released between now and then. FactSet recently reported that analysts have been reigning in expectation for corporate profits in Q2 due to concerns about inflation and tariffs.
What We're Reading
- More Chaos, but That Shouldn't Be a Surprise - Sonu Varghese
- Risk of Regional Conflict Drives Oil Price Surge - Axios
Have a great weekend.
Dogwood Wealth Management