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Market Snapshot 5.11.23- Always Play Defense

Good Morning on this terrific Thursday,

Inflation on the consumer side edged slightly lower in April, likely keeping the Federal Reserve on course to pause interest-rate increases at its next meeting. The consumer-price index rose 4.9% in April from a year earlier, the Labor Department said Wednesday, down from March’s 5% increase. The inflation reading has declined from a recent peak of 9.1% in June 2022, but remains historically high. On a monthly basis, consumer prices rose a seasonally adjusted 0.4% in April, versus a 0.1% gain in March. April’s increase was driven by housing costs, which economists expect to cool in the coming months.

That was yesterday, today we saw that inflation at the producer level, is cooling even more so, which will of course filter into the consumer metrics. On top of that, unemployment claims increased more than expected. The economy is certainly slowing. The 10-yr is heading back to the bottom of the channel and if we break below that and close there today and tomorrow, we could be looking at the 10-yr heading below 3.20. If not, we will continue to be range bound. A breakout will happen, it is just the timing.

For now, I think we are safe to float but always play defense as that can change.

This was nice to read:

Job satisfaction hit a 36-year high in 2022, reflecting two effects of the tight pandemic labor market: The quality of jobs improved as wages and work flexibility increased, and workers moved into positions that were a better fit. Last year 62.3% of U.S. workers said they were satisfied with their jobs, according to new data from the Conference Board, up from 60.2% in 2021 and 56.8% in 2020. Among the happiest workers: people who voluntarily switched jobs during the pandemic and individuals working in hybrid roles with a mix of in-person and remote work.

Why is there concern over commercial real estate? Well, 26 Empire State Buildings could fit in the vacant rental space in NYC. That is more than 70 million square feet, and it is a sobering thought.

Please remain safe and stay healthy, make today great!