Two the Point — U.S. Economy: No Stag, No Flation

In this week’s market update, we delve into the latest economic data, emphasizing the absence of stagflation and the implications for the investment landscape.

Key Insights:

  • Robust Employment Data: May saw the addition of 272,000 new jobs, surpassing expectations and signaling continued normalization as the labor market is set to come back in balance by year end.
  • Cooler Inflation Data: U.S. CPI was flat month-over-month at 3.3% year-over-year. Meanwhile, Core CPI increased a modest 0.2% month-over-month and Core Services posted the smallest contribution to inflation since September 2021.
  • Federal Reserve Outlook: Though the bar remains high, the data supports a potential first Fed rate cut in September, and we anticipate a surgical approach to normalizing monetary policy.
  • Market Implications: The robust earnings outlook and market broadening present significant investment opportunities for portfolios.

 

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