Hello, this is Josh Waynick, Senior Investment Strategist at Fifth Third Bank
Over the last week, global equities moved higher with the S&P 500 posting the best weekly return in 2024, recovering most of the losses observed from the prior week. Specifically, the Dow Jones Industrial average gave investors a return of 2.6%. The S&P 500 moved higher by 4.1%, the Nasdaq composite soared by 6.0%, and the Russell 2000 returned 4.4% over the last week.
Looking at debt markets, a week after the U.S. Treasury Yield Curve became positive sloping for the first time in over two years, market participants observed yields move lower in a near uniform shape with multiple term points seeing yields lowered by 5 to 6 basis points. Specifically, the 2-year yield ended Friday at 3.59% with the 10-year yield ending the week at 3.65%. As a result, after U.S. Treasury curve normalization, the 2-year/10-year spread ended the week at a positive six basis points.
The dollar index, which measures the U.S. Dollar against a basket of global currencies, moved slightly lower during the week and ended the week down 0.1%. Gold rose by 3.2% over the week and ended the week at $2,578 per oz. Oil rose by 1.5% and broke a trend of four weeks in a row of lower oil prices. Specifically, at the end of Friday, West Texas Intermediate sat at $68.65 per barrel.
The strong week for equity investors came on the backs of additional progress on the inflation front. This past Wednesday, Consumer Price Inflation came in at 2.5%, below last month’s 2.9%. This past Thursday, Producer Price Index came in at 1.7%, below last months revised 2.1%. Further progress on the domestic inflation front should allow the U.S. Federal Reserve to begin cutting interest rates at their September meeting. Finally, this past Friday the University of Michigan Sentiment index came in above expectations and above last month’s reading, driven by moderating inflation and prospects for an improvement in household income.
Looking ahead to this week’s economic news, on Tuesday the 17th, investors will get new data points on the U.S. Consumer with Retail sales figures reporting changes relative to last month. Current expectations are for a decline of 20 basis points; but removing autos, expectations are for growth of 20 basis points. The big news this week comes on Wednesday when the U.S. Central Bank will detail its latest thoughts around interest rates. Currently, investors are expecting one-or-two 25-basis point interest rate cuts. In addition to the rate decision, market participants will get updates on the Federal Reserve’s Summary of Economic Projections, which will detail to the market what the central bank’s forecasts are on GDP, Inflation, and Unemployment for 2024 and 2025.
That concludes this week’s Economic Beat. As always, we will be watching and reporting back to you next week.
