Last week was another interesting week in the markets, the economy and in the headlines. For the most part, last week was a retracement of some recent impressive gains in the stock market, though Friday’s close was notable, as heavy buying at the end of the day prevented last week’s losses from being even deeper. Despite last week’s performance, though, last month still ended up being the best month of May for the S&P and Nasdaq since 2003. Last week, of course, was also notable for what is happening in politics and how it might impact the Presidential election. However, so far, the impact has not been significant according to the latest Election Betting Odds. 

There were some key economic numbers last week. First, the Fed’s preferred inflation indicator was released Friday, the PCE Index. The numbers came in as expected, at 2.7% year-over-year for the headline number and 2.8% growth over the last year for the Core PCE (ex-food and energy). Though expected, the numbers also proved that they remain stubbornly higher than many had hoped at this stage in the economic cycle. It is notable that the Core PCE has risen at a 3.8% annual rate over the past three months. In short, the inflation numbers have not provided the Fed nor the markets with enough evidence that we will get close to the Fed’s preferred 2.0% rate anytime soon. The “higher for longer” idea regarding interest rates continues to gain more adherents and indeed expectations for a Fed rate cut anytime soon continue to dwindle. Ten-year Treasury yields also rose last week, though they were able fall back toward 4.5% by the week’s end. 

Last week, real GDP growth in Q1 was also revised lower to a 1.3% annual rate from a prior estimate of 1.6%. As for GDP expectations moving forward, the latest GDPNow from the Federal Reserve Bank of Atlanta is projecting 2Q24 GDP at 2.7% as of May 31st, 2024. For a frame of reference, the 20-year average growth rate of GDP is 2.0%.

This week, given it is the first full week of the month, the nonfarm payrolls report will be released on Friday. We are still sitting near 50-year lows in unemployment. Current expectations are for 178k payroll growth and another 3.9% unemployment rate. Given recent headlines and market narratives, it will also be key to keep watching what is happening in Nvidia (which is almost acting like a separate asset class), the commodity markets (such as copper and gold), interest rates (will 10s hit 5%+ before dropping below 4% next?), and of course the latest election betting odds. 

Regardless of how each of these factors play out in the short-term, the bottom line remains:

 

Stay invested. Stay diversified. Stay disciplined.

 

If you have any questions or comments, please let us know at strategists@brinkercapital.com or at rusty@orion.com. Thank you for your time and trust. See you next week!

 

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Key Data

Stocks, Bonds, Alternatives, & Real Assets as of May 31, 2024

Security Name

Risk Score

1 Wk

1 Mo

QTD

YTD

1 Yr

3 Yr Ann.

Global Equities (60% US, 40% Intl)

100

-0.65%

3.98%

0.59%

8.58%

23.69%

5.30%

S&P 500 Total Return

102

-0.49%

4.96%

0.67%

11.30%

28.19%

9.57%

Dow Jones Industrial Average

97

-0.88%

2.58%

-2.47%

3.52%

19.97%

6.00%

NASDAQ 100 Total Return

122

-1.43%

6.39%

1.68%

10.54%

31.12%

11.55%

TV Benchmark

107

-0.94%

4.64%

-0.04%

8.45%

26.43%

9.04%

Morningstar US Large Cap

102

-0.53%

5.43%

1.35%

12.58%

30.23%

10.08%

Morningstar US Mid Cap

113

-0.98%

2.40%

-2.80%

5.82%

22.74%

3.72%

Morningstar US Small Cap

125

0.25%

4.24%

-2.61%

2.94%

22.19%

0.46%

Morningstar US Value

98

0.67%

3.79%

-0.77%

7.58%

23.21%

7.59%

Morningstar US Growth

126

-1.29%

4.59%

-1.61%

6.59%

23.73%

3.10%

MSCI ACWI Ex USA 

98

-0.89%

3.00%

1.23%

6.10%

17.33%

0.79%

MSCI EAFE 

101

-0.03%

4.00%

1.45%

7.46%

19.12%

3.60%

MSCI EM

98

-3.09%

0.59%

1.07%

3.53%

12.85%

-5.85%

Bloomberg US Agg Bond Index

27

0.04%

1.70%

-0.87%

-1.64%

1.31%

-3.10%

Bloomberg Commodity Index

70

-1.84%

1.76%

4.49%

6.79%

10.95%

6.85%

Wilshire Liquid Alternative Index

25

-0.08%

1.20%

0.19%

3.36%

8.43%

1.23%

US Dollar

10

-0.37%

-1.42%

0.16%

3.34%

0.53%

5.17%

Bloomberg US Treasury Bill 1-3mo

1

0.09%

0.49%

0.92%

2.26%

5.51%

2.97%

Source: Morningstar

The TV Benchmark represents an average of the S&P 500, Dow Jones IA, and NASDAQ 100 return indexes. The Orion Risk Score represents risk relative to the global equity market.

 

 

Interest Rates as of May 31, 2024

Rate

This Week

1 Wk Δ%

13-Wk Treasury Yield

5.24%

0.00%

10-Yr Treasury Yield

4.51%

0.04%

Bloomberg US Agg Yield

5.20%

0.00%

Avg Money Mkt Yield

5.13%

0.01%

Avg 30-Yr Mortgage Rate

7.05%

0.00%

Sources: Yahoo Finance, S&P Global, Crane Data, BankRate

 

 

Key Economic Data Last Week

Data Point

Expectation

Actual

Q1 GDP (First Revision)

1.2%

1.3%

Personal Income

0.3%

0.3%

PCE YoY

2.7%

2.7%

Core PCE YoY

2.8%

2.8%

Sources: MarketWatch, First Trust

 

 

Key Economic Data This Week

Data Point

Expectation

Release Date

ISM Manufacturing

49.6%

6/3/24

ADP Employment

179,000

6/5/24

Consumer Credit

$10.7B

6/7/24

US Nonfarm Payrolls

178,000

6/7/24

US Unemployment Rate

3.9%

6/7/24

Source: MarketWatch

 

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