June Recap and Looking Ahead to July

The markets were up modestly in June.  Stocks were largely in a holding pattern as investors continue to wait for signs that the Federal Reserve will lower interest rates in the near future. 

On that front, the most recent inflation data suggests that prices are once again starting to cool slightly.  Consumer prices were up 3.3% in May compared to a year ago.[1]  That’s down from the 3.4% mark in April.[1]  However, that is still well above the Fed’s preferred level of 2%.  It’s unlikely that rates will come down until prices drop further. 

The broader economy still appears healthy, with the U.S. adding a strong 272,000 jobs in May.[2]  Wage growth has also gone up over the past year.  However, there are also signs of weakness in the labor market, as despite the additional jobs, the unemployment rate actually increased to 4%.[2]  This is still near historic lows, but it’s worth keeping an eye on.   (Job growth and the unemployment rate are two separate reports, generated by two separate sets of data.  Currently, it appears the pace of new jobs is being balanced out by the number of people who are leaving the labor force, resulting in a slight uptick in unemployment.) 

What We’re Keeping an Eye On In July and Beyond

For the last two years, the Federal Reserve has been walking a tightrope of trying to keep interest rates high enough that inflation cools down without triggering a recession.  So far, the central bank has been able to keep that balance, but the wire is starting to look a little wobblier.  While inflation is once again starting to come down, we must be on the lookout for any signs that the economy is cooling off at a faster rate than prices are.  Should that happen, the Fed may have no choice but to lower rates sooner than they expected.   

As we navigate through the summer months, remember to take some time to relax and enjoy the beautiful weather. Rest assured, Jackie and I are diligently monitoring the financial markets to keep you informed and prepared for whatever comes next.

Wishing you a wonderful summer filled with joy and relaxation!

[1] “Here’s the inflation breakdown for May 2024,” CNBC

[2] “US job gains surge past expectations,” Reuters