Economic Update 7-01-2024

• Economic data for the week included the final release of Q1 U.S. GDP being revised up slightly, flattish durable goods orders, rising home prices, and lower new home sales. On the inflation side, core PCE continued to decelerate lower.
• Equities were mixed last week, with flattish results in the U.S., except for small cap, which gained, and varied results abroad. Bonds generally lost ground as yields rose. Commodities were little-changed with a slight rise in the price of crude oil.

U.S. stocks were mixed last week, with large caps little changed, and small caps seeing gains. The end of the quarter has tended to be an unusual time, due to a variety of portfolio clean-up, ‘window dressing,’ and index rebalancing issues as considerations, leading to movements in both directions. It’s also possible that President Biden’s perceived poor performance in the first candidate debate caused another cloud to form over the election, with markets disliking uncertainty more than anything. By sector, energy led with gains of nearly 3% (with rising odds of a Trump victory pointing to better prospects for fossil fuels rather than green energy), followed by a slight gain in communications. On the lagging side, materials and utilities lost about a percent. Real estate gained despite interest rates ticking higher.

Foreign stocks were a mixed bag, with declines in Europe and the U.K., while investors awaited the snap elections in France on June 30, as well as digested a variety of economic data points. On the positive side, Japan saw a gain of several percent, as officials indirectly alluded to further currency interventions to stem the slide in the value of the yen, as well as expectations for a possible central bank interest rate hike (normally a negative, but in this case a potential sign of a return to more normal policy). Emerging market countries were similarly mixed, with India and Korea experiencing gains, while China fell back by over a percent.

Bonds fell back last week as interest rates rose by mid-week, with the PCE release offering little relief by the week’s end. While high yield fared a bit better than investment-grade, floating rate bank loans ended best with positive returns. Foreign bonds fell back across the board, along with higher rates due to an expected cautious approach by central banks to cutting rates.

Commodities had a mixed and largely uneventful week, with gains in energy and precious metals, and declines in agriculture (corn and soybeans). Crude oil rose about a percent last week to just under $82/barrel.

Period ending 6/28/2024	1 Week %	YTD %
DJIA	-0.08	4.79
S&P 500	-0.06	15.29
NASDAQ	0.26	18.57
Russell 2000	1.33	1.73
MSCI-EAFE	0.36	5.34
MSCI-EM	0.06	7.49
Bloomberg U.S. Aggregate	-0.65	-0.71

U.S. Treasury Yields	3 Mo.	2 Yr.	5 Yr.	10 Yr.	30 Yr.
12/31/2023	5.40	4.23	3.84	3.88	4.03
6/21/2024	5.49	4.70	4.26	4.25	4.39
6/28/2024	5.48	4.71	4.33	4.36	4.51

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.                                                                                    

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.