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Market Commentary

Stocks go up, stocks go down. Interest rates change, housing trends ebb and flow. How do you keep up with the markets and economy? Vizo Financial offers weekly and monthly market commentaries to keep your credit union apprised of the current economic and market trends. Read the latest now!

May Monthly Market Commentary

Perception vs. Reality

For economists and policymakers, waiting for inflation to subside is like waiting for Godot. But that time may finally have arrived, as the consumer price index (CPI) rose less than expected in April. It was the first time this year that inflation did not surprise on the upside, giving hope that the strenuous efforts by the Federal Reserve over the past two years are finally bringing results. For sure, one month does not represent a trend and the tame inflation reading in April will not prompt the central bank to start unwinding the steep interest rate hikes it put into effect from March 2022 to July of last year. But it at least stifles concern in some quarters that more rate hikes might be needed to finish the job.

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March Monthly Market Commentary

Noisy Data Complicates Fed Policy

With a presidential election looming, geopolitical tensions escalating and a central bank considering a major shift in its policy stance, 2024 looks to be an eventful year with a wide range of possible outcomes. So far, the financial markets are taking a “what, me worry?” attitude, as stock prices have hit new records and businesses have had little trouble raising huge amounts of funds in the capital markets. One reason for market complacency, of course, is that unfolding developments and the swirl of uncertainty facing the nation have hardly put a dent in the economy. The job market is still chugging along; incomes are rising amid easing inflation; consumers are grumbling about high prices and interest rates but continue to spend; and household, as well as business, balance sheets are in good shape.

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Weekly Market Commentary

June 10, 2024

Friday's robust monthly employment report silenced a nascent whisper campaign that a July rate cut by the Fed was on the table. That notion was spurred by a string of incoming data revealing a softening job market, cooling inflation and signs of slower growth in the broader economy, underpinned by a pullback in consumer spending. While those trends have not been upended, in our view, the stronger than expected job growth in May is an upside surprise that should defuse any dovish sentiment that might have appeared at next week's FOMC meeting. Indeed, the fraction of hawkish Fed officials who believe that policy is not restrictive enough may well be emboldened by the latest jobs report.

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June 3, 2024

The latest spate of Fed speakers did little to squelch market concerns that interest rates would be held at elevated levels for the foreseeable future. Indeed, market sentiment of late is that the long-awaited cuts will be pushed back even further than thought a few weeks ago. Stubborn inflation amid a still muscular – though modestly slowing – economy continues to be the key hurdle blocking the initial move. Recent economic reports, including this week's batch of data, provided no reason for traders to change their view. A common theme underscoring the Fed's persistence in keeping rates steady is that they have yet to materially tame the drivers of inflation. Consumers are still spending, the job market continues to chug along and even residential construction, historically the most rate-sensitive sector of the economy, is booming. While price increases are slowing, punctuated by Friday's mildly encouraging report on the PCE deflator for April, they are doing so far too gradually for the Fed's comfort. What's more, the public still frets more over the high level of prices relative to three years ago than the slower monthly inflation rate over the past year.

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May 28, 2024

The “good news is bad news” narrative roiled the financial markets this week. It’s no secret that traders are looking for signs that the economy is cooling off, taking the heat off inflation and providing the Fed with the necessary incentive to start cutting interest rates. While the ingredients for this scenario fell into place late last year, they have appeared on and off over the first four months of this year, launching a roller coaster ride for stocks and bonds. This week was no exception. To be sure, the odds are still in favor of a Fed rate cut before the end of the year. But incoming data and signals from the Fed indicate that those odds are becoming slimmer by the week.

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May 20, 2024

Three steps back, one step forward for disinflation. That’s clearly too much of a bumpy ride which, if sustained, would not lead to the Fed’s two percent destination. That said, the case can be made that an array of flukes skewed the hot inflation data over the first three months of the year whereas the tamer reading in April, revealed this week, is more reflective of underlying conditions. Whether or not that’s looking through rose-colored lenses, the Fed is not inclined to take the bait. It will take more than one month of encouraging data to prompt Fed officials to move up the start of its rate-cutting plans. The financial markets, in contrast, are more inclined to see green shoots in the inflation battle; following this week’s encouraging consumer price report, traders now believe the tide has turned and are pricing in a cut sooner rather than later, pulling the initial cut forward to September from November. Still, an observer could get whiplash monitoring the repeated shift in market expectations and trying to anticipate when the rate-cutting campaign would begin.

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