Weekly Market Update
By Michael McKeown, CFA, CPA - Chief Investment Officer
Chart of the Week
An agreement is in place to raise the debt ceiling until January 1st, 2025. It goes to the House for a vote on Wednesday and, if passed, to the Senate later in the week. The deal is a reduction of $1.5 trillion in discretionary spending over the next decade. This reduces spending to 0.1% to 0.2% of GDP over the next two fiscal years. The deal lowered the volatility of short-term U.S. Treasury bills as worries of a default dampened. Still, the strength of the economy and prices has put Federal Reserve interest rate hikes back in play after a pause was expected a few weeks ago. May’s jobs and CPI reports will be key datapoints to watch as traders decide how many more hikes are possible. The yield curve remains inverted at a higher level than just three months ago.
What We’re Reading
Expectations Debt – Morgan Housel
Investors Want More Exposure to Japan – Institutional Investor
Get Ready for Every Asset Manager to Launch an AI-Based ETF – Investment News
Venture Capital Coming Back Down to Earth is a Good Thing – Adams Street
Podcast of the Week
Imagination, Volatility, and the Pursuit of Alpha – Invest Like the Best
Gross Domestic Product (GDP) was revised higher to 1.3%. The Core Personal Consumption Expenditures (PCE) Index came in above expectations, showing price inflation remains sticky to the upside. Durable goods orders, sentiment, and consumer confidence outpaced estimates.
The Week Ahead
On Friday, we will see the jobs report for May and if the economy can continue adding jobs in the face of recession calls. We also see a batch of economic activity reports on manufacturing and services.
Thank you for reading.
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