• The market continues to scale back its expectations for Fed rate cuts in 2024.
  • The 2-year Treasury yield is back at 5%.

 

 

  • Financial conditions have been tightening.
  • Forecasters continue to boost their estimates for this year’s GDP growth, …

 

 

  • Economists are also upgrading their forecasts for this year’s CPI increase amid robust consumer spending and higher energy prices.

 

 

  • The flash PMI indicators from S&P Global showed a pullback in US business activity this month. Factory growth stalled as the new orders index dipped into contraction territory.
  • Service sector activity decelerated as well, with the April PMI reading falling short of expectations.
  • The report’s most startling aspect was the sharp contraction in service-sector employment, which signals a much weaker job growth this month.
  • The Philly Fed’s regional service sector report shows companies cutting back employee hours.

 

 

  • Discover Financial’s charge-off data suggests consumers are increasingly struggling to meet their credit card payment obligations.

 

 

  • When adjusted for inflation, capital goods orders continue to decline, suggesting that business investment remains soft. It should be noted that while capital goods orders provide insights into physical investment in machinery and equipment, they do not comprehensively capture the full scope of modern business investments, particularly in technology-driven areas like software and data center development.

 

 

  • Mortgage applications continue to run at multi-year lows, …

 

 

  • … as rates surge.

 

 

  • Here is a look at year-over-year home price changes by metro area.

 

 

  • The Q1 GDP report surprised to the downside, with weakness coming from strong imports (which decrease net exports) and contracting inventories.
  • Consumer spending growth was robust, driven by services.
  • The market now sees only 34 basis points of Fed rate cuts this year.

 

 

  • Treasury yields jumped.

 

 

Market Data

 

  •  Industrial metals continue to rally.

 

 

  • Copper registered four consecutive weekly gains.

 

 

Great Quotes

 

“At my age, flowers scare me.” (George Burns)

 

Picture of the Week

 

Sea turtle, San Diego, CA

 

 

All content is the opinion of Brian Decker