Weekly Market Snapshot – June 21, 2019
Created by: Sam Tenney
- Fed Fund rate clashes with core consumer price index (CPI) rates. Core CPI rose just .1% month over month (M/M) clashing with target Fed Fund rate. Historically when this happens it signals monetary policy is too tight and the Fed will cut rates. Also, historically when the Fed cuts rates then another rate cut comes within 6 months 81% of the time. July predictions for a Fed rate cut of 25 basis points is priced into the market at 100% on 2-year treasuries. ¹
- Low treasury yields may not pose a problem in such a low inflation environment and pending rate cuts could push equity markets even higher if market fundamentals remain solid. ²
- S&P 500 reaches new all-time high of 2954.18, yet the American Accredited Individual Investors (AAII) association reports the highest number of bears to bulls the past 6 weeks, using equity exchange outflows and fund manager underinvestment in equity as statistically significant factors. ³
- Tensions with Iran caused a small bump in oil prices on top of a $6 gain from $51.80 to $57.83 per barrel for June. Generally oil remains range bound to $65 per barrel spot price with no significant moves anticipated. ⁴
- Gold is up 5% month over month.
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