Good Morning,
I hope everyone had a great Father’s Day weekend!
Markets are coming off a week that delivered some mixed signals with respect to interest rates. The first FOMC meeting under Chair Warsh left rates unchanged but the tone came across as slightly more hawkish than many anticipated, increasing the odds of a rate hike later this year. At the same time, falling energy prices provided a counterbalance by easing near-term inflation concerns.
This Thursday, we’ll receive the latest PCE inflation data (Fed’s preferred gauge). The biggest variable remains the pending U.S./Iran deal to reopen the Strait of Hormuz. Markets are currently pricing in a hike for September; however, if a deal is reached, I would expect that timing to be pushed back.
Another key catalyst I’m watching this week is Micron’s earnings report, due out Wednesday. Market momentum continues to be largely tied to AI expansion, which depends heavily on semiconductor companies.
In general, the bull case remains fairly straightforward: lower energy costs, moderating inflation pressures, lower yields, and increased flexibility for central banks.
Please feel free to reach out with any additional questions or comments.
Attached is this week’s Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great week