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- Stocks were positive across the board last week. We saw global markets (represented by the MSCI All Country World Index) up 0.5% and domestic stocks (represented by the S&P 500 Index) up 0.4%. It was U.S. small companies leading the pack for the week, posting a 2.2% return (represented by the Russell 2000 Index).
- As we mentioned last week, all eyes would be on the May inflation report. It was reported that consumer prices rose at a 5.0% annual rate in May, which was higher than expected. On a month-over-month basis, prices rose 0.7% which was well above the estimate of 0.4%. The 5% annualized inflation rate is the highest 12-month increase since 5.4% for the August 2008 report. One-third of the increase was due to a 7.3% increase in used car prices.
- One interesting note about inflation came from the University of Michigan survey of consumer sentiment. As of Friday’s release, the results showed that the expectations are now for a 4% inflation figure in 2021 versus the 4.6% that Americans expected from the April report. As part of the survey, we also saw that Americans became more optimistic about economic conditions relative to the April report.
- On Thursday, market momentum pushed indexes higher and resulted in the S&P 500 hitting another record, which it previously set five weeks ago.
- Investors have seemingly become complacent with markets as the VIX (volatility index) fell to its lowest level since February 2020.
- The Fed will hold its next two-day policy meeting this week. While interest rates are largely expected to remain at current low levels, all eyes and ears will be on the rhetoric from Jerome Powell as to any next steps to tighten monetary policy.
- Americans working from home may not have noticed, but oil prices have risen to their highest levels since late 2018. During the last week, oil prices rose up above $70 per barrel.
- I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans, not for the easy times, but to prepare for the tough ones.
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