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Market Snapshot 5/30/24 – One-Two Punch

Good Thursday morning from your Hometown Lender,

Today was the first day of this week’s one-two punch for economic data.

GDP was thought to be weakening but as reported was even weaker than expected. Forecasts were for GDP to fall to 1.5% from previously reported 1.6% however, fell to 1.3%. The personal consumption component (think retail sales which accounts for 70% of GDP) dropped to 2.0 from 2.5% (that’s a big deal). . Additionally, unemployment claims were higher than expected. Pending home sales which were thought to have increased, cratered down almost 8%.

We are seeing all of this bad news translate into better pricing this morning.

The ten-year note is down to 4.55%. If we close here, we are back to almost were we closed at last Thursday. We do have another hurdle though, part two of that one-two punch as we get the Fed’s favorite inflation gauge, the PCE tomorrow. That will move markets. We are hoping for a number at .3% or less.

If we get that, it will give the markets more hope the Fed will start moving towards rate cuts.

In the meantime, the Fed’s Raphael Bostic added to the higher for longer narrative by doubling down on the stickiness of inflation, saying that “we still have a ways to go” to curb the price growth seen in the past few years. He’d want to see a reduction in the breadth of inflation pressures, which are still quite high, before getting more confidence on cutting rates. John Williams and Lorie Logan are set to continue the line of Fed speakers today.

I am keeping fingers crossed right now but I would not float into tomorrow’s data. It could very well work against us.

Stay safe make today great!