Economic Data and Market Highlights
The MSCI World index rose 15 basis points for the week and hit a record high on Friday as the dollar weakened following a flat US inflation report. The S&P 500 (-0.06%), the DJIA (-0.08%), and the NASDAQ (-0.07%) were all down modestly for the week. The negative bias was the result of value-oriented names.
Only two of the Magnificent Seven holdings remain in the top ten best performing holdings of the NASDAQ 100 year to date but growth continues to outperform value on a YTD, QTD and MTD basis.
The personal consumption expenditures index showed that prices rose 2.6% in May which is what economists were forecasting and down from 2.7% in April. The chance of a rate cut in September rose to 68% from 61% per data from LSEG Fedwatch. This data also comes on the heels of the presidential debate Thursday night between President Joe Biden and Donald Trump. Concerns around the outcome of the French parliamentary elections which start Sunday impacted risk premiums on French government bonds over German bonds to its widest mark since the euro zone debt crisis in 2012.
Real consumer spending increased by 0.3%, primarily due to a jump in wages and salaries of 0.7% throughout the month of May. The May US savings rate rose to 3.9% from April’s 3.7% Inflation and continued consumer spending have depleted the excess American savings which has dwindled below pre-pandemic levels. For context, the savings rate in 2023 was 5.3% according to the Bureau of Economic Analysis. The long-term historical average savings rate is 8.46%.
Office vacancy rates continue remain high with San Francisco and Austin having the highest rates in the US across most major cities.
The Past Week’s notable US data points
The Upcoming Week’s notable US data points
Data Source: Blackrock, Bloomberg, Charles Schwab, CNBC, Goldman Sachs, J.P. Morgan, Morningstar, Morgan Stanley, Standard & Poor’s, and the Wall Street Journal.
Authors:
Jon Chesshire, Managing Director, Head of Research
Michael McNamara, Analyst
Sam Morris, Analyst