Weekly Market Watch

Market Outlook

Last week’s release of the April Consumer Price Index (CPI) data showed inflation growth was in line with consensus expectations, at 3.4% year over year, and decelerated from the prior month’s 3.5%. The report helped ease investor concerns about “sticky” inflation. The week culminated with the S&P 500^®, Dow Jones Industrial Average and Nasdaq Composite indices reaching all-time highs.

The 10-year U.S. Treasury yield declined for the week; however, it also bounced off its 200-day moving average, which confirms our view that interest rates will likely remain range-bound for some time.

With the upcoming release of the Federal Open Market Committee (FOMC) meeting minutes this week, investors await further insight into the Federal Reserve’s (Fed’s) stance on the path forward for policy changes. Consensus continues to expect a 25-basis-point (bp) rate cut in September, and a second 25-bp cut in December of this year.

Table of the Week

While the monthly CPI report made headlines last week, we believe markets are more focused on measures of the economic activity driving inflation, such as retail sales.

Last week’s retail sales report missed consensus expectations, which reassured investors that while consumer spending remains robust, it is not dramatically accelerating.

We continue to believe the market’s path forward is driven by expectations that the Fed’s next policy action will be a rate cut rather than a hike.

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