Latest / Markets with Megan: A Quick Financial Markets Update / Analyzing Incremental Inflation Progress | Episode 139 | 05-31-24

Transcript

Analyzing Incremental Inflation Progress | Episode 139 | 05-31-24 · Markets with Megan: A Quick Financial Markets Update

• 0:01
  Megan Horneman: Baby steps.
• 0:01
  Megan Horneman: That's what the market's celebrating today.
• 0:03
  Megan Horneman: This is Megan Horniman, the Chief Investment Officer for Verdant's Capital Advisors.
• 0:07
  Megan Horneman: It's Friday, may 31st, and the baby steps we saw in economic data today was a very small incremental improvement in inflation.
• 0:16
  Megan Horneman: We got the Fed's preferred inflation indicator today, the PCE core deflator, and what we saw was, on a month over month basis, it went from rising 0.3% to just up two tenths of a percent.
• 0:29
  Megan Horneman: On a year over year basis, it's still rising 2.8%.
• 0:33
  Megan Horneman: So we're not necessarily where the Fed wants it to be, but these are the tiny baby steps the Fed's looking for Now.
• 0:40
  Megan Horneman: Also, with this report, we get personal income and spending and the reason why we're seeing bond yields down today, not only because there was no major surprises in the inflation data, but because some of the economic data we got with this report on spending and income was weak.
• 0:55
  Megan Horneman: We saw that personal spending went from rising 0.7% in March to only up two-tenths of a percent in April and when you strip out inflation with that, real personal spending is actually now negative.
• 1:10
  Megan Horneman: These are the first indications that we were getting for second quarter GDP.
• 1:15
  Megan Horneman: So this is important, especially since the second reading on first quarter was a bit weaker than anticipated.
• 1:21
  Megan Horneman: So that's why the bond markets liking this.
• 1:24
  Megan Horneman: They're thinking this opens the door for the Fed to be able to cut rates as early as September.
• 1:28
  Megan Horneman: We're not there yet.
• 1:30
  Megan Horneman: Again, the inflation it was a baby step.
• 1:32
  Megan Horneman: It went from rising three-tenths to two-tenths, but at 2.8% it still is not where the Fed needs to be, and they're making it clear that they want to see several months of good inflation data before they can even consider cutting interest rates.
• 1:46
  Megan Horneman: That's all we have today.
• 1:48
  Megan Horneman: We'll be back next week because it's the first week of the month and there is a lot of economic data that always comes out the first week of the month.
• 1:54
  Megan Horneman: We're going to start it off with ISM manufacturing, the service report, and then we'll round the week out with the non-farm payroll report as well.
• 2:02
  Megan Horneman: If you have any questions or comments, please feel free to reach out to podcasts at Verdence.
• 2:06
  Megan Horneman: com.
• 2:06
  Megan Horneman: Thank you.