WEEKLY MARKET UPDATE 6/14/2024

Inflation as measured by the core consumer price index (CPI) came in at its lowest levels since August 2021, but the Federal Reserve kept interest rates unchanged.  In addition, the Fed reduced its forecasts for rate cuts in 2024 from three to one, as hotter-than-expected inflation data in the first quarter of the year appears to have shaken the committee’s confidence in inflation returning to its 2% target. 

Nonetheless, the S&P 500 finished higher on the week and bonds, as measured by the Bloomberg US Aggregate bond index, enjoyed their strongest week of the year.  However, stock market leadership continues to be very narrow as only three of the eleven sectors in the S&P 500 finished the week higher, most notably technology.  Next week will only have four trading days due to the Juneteenth market holiday on Wednesday, but investors will focus on May’s retail sales report and manufacturing and services data to provide more visibility around inflation.

SWIFT INFLATION

While the Federal Reserve has been reluctant to cut interest rates, economists at TD Cowen noted a remarkable reason that the Bank of England (BOE) might also be hesitant to cut  – Taylor Swift.  The star musician will be touring the U.K. in August and there are concerns that she will supercharge hotel and services inflation as 1.2 million fans flock to the area and spend an estimated £1 billion (per Barclays).   As a result, inflation data for August may be skewed materially higher and complicate matters for the Bank of England during their September meeting.  “Swiftflation” strikes again…

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder


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