Mid-Week Market Minute 6.7.23

Stocks, Bonds Mostly Unchanged; CPI, Fed Meeting Next Week

Stocks trended sideways in back-and-forth trade this week with the S&P 500 essentially unchanged as of Wednesday. In bonds, interest rates were mostly unchanged, as well, with the yield on the 2-year and 10-year Treasury notes trading around 4.53% and 3.71% respectively mid-week. 

With a relatively quiet week on the economic data front, market participants are looking forward to two key events next week. The first is the release of consumer prices (CPI) on Tuesday, June 13, where investors are hoping inflation readings will continue to fall from last month’s 4.9% (headline) and 5.5% (core) numbers. The other key event is the Federal Reserve meeting on June 13-14. The futures market is pricing in a high likelihood of one additional rate hike by the end of July, with more bets the Federal Reserve will pause in June and hike in July. 

Overseas, trade data released in China has drawn attention to concerns around the post-pandemic recovery in the world's second largest economy. Wednesday’s report showed China’s exports slumped 7.5% from a year ago in May, compared with economists' expectations for a 0.4% decline and adding to worries about the health of the recovery in China. On the brighter side, in Europe, German Industrial Production rose by 1.8% year-over-year versus expectations for a 1.4% increase. These better-than-expected production numbers help ease concerns about the health of the European economy. On the commodity front, oil continued its downward trajectory for the year with a barrel of WTI Crude oil trading around $71.49. Despite the news of additional production cuts from Saudi Arabia and OPEC, these developments have been largely overshadowed by demand concerns amid slowing economic activity around the globe. 

Source: GSAM, CNBC, JPMorgan

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