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Posted on July 2, 2018

Weekly Market Commentary July 2, 2018

Market Commentary

Stock markets finished the quarter on a down note. The S&P 500 and the global MSCI ACWI both dropped 1.3%. The Bloomberg BarCap Aggregate Bond Index shrugged off higher inflation and rose 0.3% last week.

The second quarter was a good one for U.S. stock investors. The S&P climbed 2.9%, erasing first quarter losses and leaving the index up 1.7% for 2018. Global stocks were down a tiny 0.1% in the second quarter and are down 1.5% on the year. Bonds posted a second straight quarter of losses, down 0.2%. Bonds are down 1.6% this year.


Key points for the week

  • Core inflation hit the Federal Reserve’s target.
  • The S&P 500 rose almost 3% in the second quarter after declining in the first.
  • Bonds and global stocks declined slightly during the quarter.

Economic News

Core PCE (personal consumption expenditures) finally reached the Federal Reserve’s stated target, almost. With some beneficial rounding, the Fed’s preferred measure of inflation reached its 2% target. It is the first time the measure has reached 2% in the last six years.

The May data suggest the trend is toward moderately higher inflation. May was the six month in a row that the monthly data increased by 0.2%. Higher energy prices, which are not part of the core measure, continue to increase. The added boost from energy prices pushed overall prices up 2.3% over where they were last year.

As long as employment growth remains strong and wages continue to increase, we expect core inflation to march higher and regularly meet or exceed 2% in coming months.

Source: Federal Reserve Bank of St. Louis https://www.federalreserve.gov/monetarypolicy/openmarket.htm

PCEPI Personal Consumption Expenditures: Chain Price Index


Fun Story

George HW Bush enlists help of new service dog Sully

The Bush family added a new member last week, a service dog named Sully HW Bush. Sully is quite amazing. He can perform a two-page list of commands ranging from answering the phone to fetching needed items. Sully is the product of a nonprofit organization, America’s VetDogs, which provides service dogs to veterans free of charge. Sully even has an Instagram account to spread awareness of the importance of service dogs for individuals with disabilities.