Chart of the Week
This is the only business where prices go on sale and people rush out the door. With yields up and bond prices down, investors have been selling bonds at the fastest pace in two years. This is despite municipal bonds offering a yield on a tax-adjusted basis above 5%. Last year, this was below 2%. The spread is above the 10-year average.
What We’re Reading
The Survival Instinct of Money – More To That
Eye on the Markets: Independence Days – JPMorgan
6 Things to Know About Stock Market Crashes and Downturns – Morningstar
So You Think We Might Be in a Recession? – Econbrowser
For Lessons on Fighting Inflation, Skip Over Volcker to 1946 – Guggenheim
Podcast of the Week
Five Reasons Everybody Is Wrong About a U.S. Recession – Including Me – Plain English, The Ringer
Tweet of the Week
Oaktree manages $164 billion on behalf of its clients. CEO Howard Marks is known for being a prudent value investor and for the memos that he began sending out by hand 30 years ago. This week he spoke with the Financial Times and said that while it is tempting to try and hold out for the bottom in stock and bond prices, now is the time to buy. He added that assets could become cheaper than current valuations, “in which case we’ll buy more.”
The Past Week
Durable goods orders surprised on the upside to start the week of June 27th. On Tuesday, consumer confidence came in below expectations while the final first quarter GDP report was revised down by 0.1% to -1.6%. On the positive side, inflation pressures continued to drop as core prices rose 0.3% on a monthly basis. Personal income data also came in above expectations. On the downside, consumer spending grew by 0.2% but less than expected, and was negative on an inflation-adjusted basis.
The Week Ahead
With the Fourth of July on Monday, we have a holiday-shortened week. There will be plenty of data to watch closely, including the PMI (Purchasing Manufacturers Index) and the monthly jobs report on Friday. Consensus expectations are for an additional 295,000 jobs and the unemployment rate to hold steady at 3.6%.
Talk to you next week.
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