Presented by The PensionmarkMeridien Team, September 17, 2024
Major U.S. stock indexes digested continually tame inflation data last week, and market bulls were on parade as participants look forward to this week’s Fed meeting. In summary, last week the S&P 500 added 4.02%1, the NASDAQ 100 increased by 5.93%2, and the Dow Jones Industrial Average rose by 2.60%3.
SOFTENING INFLATION DATA
According to the most recent metrics released last week, inflation continued to cool in August. The grandfather of inflation data, CPI,showed continued cooling in inflation on the consumer level. Data for August showed a monthly increase of 0.2%, which equaled a 2.5% year-over-year inflation rate– the lowest since early 20214.
Core CPI, which includes food and energy, rose a tick above expectations, tacking on 0.3% for the month versus expectations for 0.2%. The main culprit for the rise in the core was Shelter costs–accounting for 70% of the core increase4–seeing monthly gains of 0.5% and an annualized increase of 5.2%. Used vehicles declined by 1%, while apparel pricing rose by 0.3%. And here we go again–egg prices rose 4.8% on the month.
CPI MARKET REACTION
Major U.S. stock indexes initially sold off upon the data release and fell throughout the day, as the report suggested to firm up expectations for a run-of-the-mill 25 basis point cut this Wednesday. Typically welcome news, the Dow briefly fell 743 points5 before mounting its biggest intraday comeback in almost two years.
Traders were busy handicapping hard versus soft landing probabilities5 and figuring out whether the Fed’s timing is right. Following the release of CPI data last Wednesday, traders priced in greater than 100 basis points of rate cuts over the final three Fed meetings this year. Positioning showed a 50-bp cut expected in November or December, with a 50% chance of seeing one this week6.
The day after PPI data was released, Producer Pricing (wholesale pricing) showed a rise of 0.2% in August, matching Dow Jones estimates7. Major stock indexes came into the data higher from the previous day’s CPI print and continued their upward journey, having another positive day.
PENSIONMARKMERIDIEN EVENT(S)
We would love to have you join us one of the event(s) below. To get more information or to register click the topic, which is highlighted and underlined in blue. Are you unable to join us for the planned event? Register, or email me, and we can send you the replay when it is available.
| DATE | TIME | LOCATION | TOPIC |
| Wednesday, September 18 | 12 PM – 12:30 PM | Webinar | Plan Sponsor Survey |
| Thursday, September 26 | 10 AM – 10:30 AM | Webinar | Retirement Income Solutions |
FEDWATCH
With market reaction to CPI and PPI last week being equity-market-supportive, last week painted a Fed-friendly picture. As of the close of last week’s trading, futures traders show a dead heat between a 25 basis point cut and a 50 basis point cut at this Wednesday’s Fed meeting, according to the CME FedWatch tool6.
Gathering consensus elsewhere, opinions are divided; we will have to see what the Fed does, and some may think a 25 BP cut leaves something to be desired as far as timing. A 50 bp cut would certainly loosen up lending and spur activity.
GOVERNMENT BOND YIELDS DECLINE
As major stock indexes rose last week, government bond yields fell, indicating expectations for lower Fed overnight rates and a risk-on attitude. Ten-year note yields lost around six basis points to end the week near 3.651%8. Two-year notes lost around 6.6 basis points, closing the week near 3.584%9. With tens out yielding twos again this week, the 2/10 yield curve “uninversion” or normalization continued for a second week10.
THE WEEK AHEAD
We find ourselves further into election season as the markets eagerly anticipate rate cuts starting this week. Using CME FedWatch Tool as an indicator, opinions are split down the middle–something we are not used to being this close to a Fed meeting date.
CPI and PPI data are constructive in that the inflation battle has been fruitful and productive, but it is not quite over yet. However, last week’s data showed that CPI is getting closer and closer to the Fed’s 2% annual target annual inflation rate.
With all of this said, if there is anything on your mind regarding the markets and the latest developments, contact us at the phone number or email address below.
We are here as a resource for you whenever you need us.
The PensionmarkMeridien Team may be reached at 866-871-9963 or meridienteam@pensionmark.com
Know someone who could use information like this?
Please feel free to send us their contact information via phone or email. (Don’t worry – we’ll request their permission before adding them to our mailing list.)
Advisory services offered by Pensionmark Financial Group, LLC. Securities offered by Pensionmark Securities, LLC, member FINRA/SIPC. Pensionmark Financial Group, LLC is affiliated through common ownership with Pensionmark Securities, LLC.
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Citations:
1. Trading View, September 14, 2024
2. Trading View, September 14, 2024
3. Trading View, September 14, 2024
4. CNBC, September 11, 2024
5. MarketWatch, September 11, 2024
6. CME Group, September 2024
7. CNBC, September 12, 2024
8. Trading View, September 14, 2024
9. Trading View, September 14, 2024
10. Trading View, September 14, 2024
Advisory services offered by Pensionmark Financial Group, LLC. Securities offered by Pensionmark Securities, LLC, member FINRA/SIPC. Pensionmark Financial Group, LLC is affiliated through common ownership with Pensionmark Securities, LLC.