Outlook

Stocks finished the last week of June and Q2 mixed as investors digested a fresh round of economic data

News of slower job growth, slowing wage growth, and a slight uptick in unemployment helped drive down Treasury yields, and stocks finished the short week with a strong rally

We discuss various parts of the consumer reaction function that help explain the divergence between consumer sentiment and some important pieces of macro data. We also give thoughts on what this disconnect may mean for consumer and voter behavior.

No matter how clearly Chairman Powell signals the Federal Reserve’s (Fed) plans to bring inflation back to target, investors continue to obsess about how soon and how many times the Fed will cut rates this year. In fact, investors have been so preoccupied with Fed policy that they missed the economy sticking the soft landing

The U.S. economy has not entered a recession despite the inverted yield curve, which historically predicted recessions, and this may be due to the relatively solid labor market setting

Stocks edged higher over the four trading days last week, with the three major averages taking turns leading based on various economic and artificial intelligence (AI) news

The inflation story is progressing roughly as anticipated, with the caveat that the disinflation process had paused in the US earlier this year.

The Fed’s decision-making is primarily driven by monthly inflation reports and labor market data, and renewed progress on inflation is necessary for the Fed to feel comfortable enough to begin the rate cutting process

Stocks notched a solid gain last week, driven by the Fed’s decision, May's inflation report, and Apple’s AI-related news.

Stocks edged lower in the final week of May as fresh news on economic growth and inflation failed to inspire investors.

Although the environment for risk assets remains largely attractive, early gains from achieving the soft landing are likely in the rearview mirror for investors. It’s going to get tougher from here. The increasing likelihood of a Fed monetary policy mistake, stubborn inflation, disappointing earnings results, toppling over the US fiscal cliff, rising geopolitical tensions, and contentious elections all pose serious risks to the rally.