Today’s Market Update

Fed Unbothered As Inflation Remains Elevated
2021-06-24

This morning equity markets edged higher and Treasury yields are essentially unchanged with the 10-year yield holding near 1.5%.  The Fed’s updated projections show that they expect to raise rates in 2023, sooner than previously expected.  And Tuesday, Fed Chair Powell acknowledged that so far inflation has been rising faster than expected.  This is of particular importance as concerns about higher levels of inflation have emerged following the recent uptick in economic indicators tracking the measure.  Although, another FOMC voting member reiterated that any rise in rates is “way off in the future” in his comments Tuesday.  Despite the worries about rising inflation, there remains significant slack in the job market which suggests the Fed may prefer to wait some time before any tightening.  While Fed officials have mentioned in recent interviews it may be appropriate to discuss easing asset purchases soon, the Fed has thus far remained steadfast in their position that they believe the current rise in inflation to be transitory and they are well equipped to slow inflation if it continues to rise rapidly.  So far in US over 55% US adults have received at least one dose of a COVID-19 vaccine and all American adults are eligible to receive a vaccine.  To date, the US has recorded over 33.5 million coronavirus cases and more than 602,000 deaths according to data from John Hopkins.

-CMS Staff

Treasury Yields

Term  Current  Last Month
3 Month0.04%0.00%
6 Month0.05%0.02%
2 Year0.26%0.15%
5 Year0.91%0.80%
10 Year1.49%1.60%
30 Year2.10%2.30%
Yields updated each morning.
Source: Bloomberg

Benchmarks

PRIME3.25%
DJIA34,100.53
Crude Oil (WTI)$73.24
YEN110.8800
Gold$1,780.09
1 Year CMT0.08%
1 Month LIBOR0.0915%
Fed Funds Effective0.07%
Next FOMC MeetingJuly 27-28th, 2021
Source: Bloomberg

Economic Indicator Calendar

DateEventPeriodSurv (M)ActualPriorRevised
06/21Chicago Fed National ActivityMay0.290.24-0.09
06/22Existing Home SalesMay5.72m5.80m5.85m
Existing Home Sales MoMMay-0.9%-2.7%
Richmond Manufacturing IndexJun2218
Richmond Manufacturing ShipmentsJun812
Richmond Services IndexJun2529
06/23MBA Mortgage ApplicationsJun 162.1%4.2%
Manufacturing PMIJun61.562.662.1
Markit Composite PMIJun63.968.7
Services PMIJun70.064.870.4
New Home SalesMay870k769k863k817k
New Home Sales MoMMay-5.9%-5.9%-7.8%
06/24Initial Jobless ClaimsJun 17380k411k412k418k
Continuing ClaimsJun 103,470k3,390k3,518k3,534k
Core Durable Goods Orders MoMMay0.8%0.3%1.0%1.7%
Durable Goods Orders MoMMay2.8%2.3%-1.3%0.8%
Durables Excluding Defense MoMMay1.7%2.2%0.5%
Good Orders Non Defense Ex AirMay0.6%-0.1%2.2%2.7%
Goods Trade BalanceMay-$88.11b-$85.73b
Retail Inventories Ex AutoMay0.9%0.6%0.7%
Wholesale Inventories MoMMay1.1%0.8%1.0%
Core PCE PricesQ12.50%2.50%2.50%1.30%
Corporate Profits QoQQ11.7%-0.8%
GDP QoQQ16.4%6.4%4.3%
GDP Price Index QoQQ14.3%4.3%1.9%
GDP SalesQ19.5%9.2%9.4%
PCE Prices Q13.7%3.7%3.7%1.5%
Real Consumer SpendingQ111.4%11.3%
KC Fed Composite IndexJun2726
KC Fed Manufacturing IndexJun3032
06/25Core PCE Price Index MoMMay0.6%0.7%
Core PCE Price Index YoYMay3.4%3.1%
PCE Price Index MoMMay0.6%
PCE Price Index YoYMay3.6%
Personal Income MoMMay-2.5%-13.1%
Personal Spending MoMMay0.3%0.5%
Real Personal Consumption MoMMay-0.1%
U. of Mich. SentimentJun86.586.4
U. of Mich. Current ConditionsJun90.690.6
U. of Mich. ExpectationsJun83.883.8
U. of Mich. 1 Yr InflationJun4.0%4.0%
U. of Mich. 5-10 Yr InflationJun2.80%
Source: Bloomberg