Jerome Powell and the Federal Reserve paused the most aggressive rate hiking cycle in 50 years last week following continued improvement from May's inflation report; headline CPI is at a two-year low (4%) while core CPI, which excludes volatile energy and food prices, fell to its lowest level since November 2021. However, further rate hikes in 2023 are not out of the question; of the 18 fed officials surveyed, the median estimate was that rates would need to rise between 5.5% and 5.75% this year, suggesting two additional 0.25% rate hikes this year. (Source: Edward Jones)
Meanwhile, equity markets and bond yields continued to climb last week. The S&P 500 Index rallied 2.6% last week and is now off to its best start since 1997, up 15% in 2023. On the bond front, yields have risen over the past few months, largely reflecting the easing anxieties of an economic recession in the second half of 2023; 10-year Treasuries ended the week at 3.77%, while 6-month T-Bills offered the highest yield along the yield curve at 5.32%. (Source: The Wall Street Journal)
Secretary of State Antony Blinken is in Beijing this week, the first time a U.S. cabinet member has visited China since 2019. The relationship soured earlier in the year when a Chinese spy balloon was downed in U.S. air space, postponing Blinken's previously scheduled visit. Key motivations for the meeting include China's aims to prevent further restrictions on chip-related exports to the country, while the U.S. seeks to prevent China from aiding Russian military efforts in the Ukraine. (Source: The Wall Street Journal)
This week, markets are closed on Monday for Juneteenth, then shifts focus to the real estate market with housing starts on Tuesday and existing home sales on Thursday.
NEWEST FEDERAL HOLIDAY - Juneteenth, the newest federal holiday which was passed into law by President Joe Biden in June 2021, celebrating the end of slavery in the U.S. The day commemorates the 158th anniversary of 2,000 Union troops who emancipated the last slave in Galveston, Texas. (Source: USA Today)
LOW HOUSING INVENTORY - Low inventory continues to be one of the primary reasons high housing prices persist. With new listings falling 23% from a year ago, there are now 39% fewer homes for sale than there were five years ago. (Source: Redfin)
NUGGETS, JOKIC WIN FIRST CHAMPIONSHIP - The Denver Nuggets won their first NBA championship in franchise history, led by Nikola Jokic. Jokic ranks 9th all-time in playoff points per game, ranks 19th in postseason assists per game and 16th in postseason rebounds per game. No other player in NBA history even places in the top 40 of all three lists. (Source: Sportico)
TAYLOR SWIFT SHATTERS RECORDS - Taylor Swifts "Eras Tour" is setting records on every front. The tour sold 2.4 million tickets in a single day and is projected to gross over $1 billion if an international leg is added to the tour. The tour is no small production; it takes 90 semi-trucks to move the show from city to city. (Source: The Grammys)