Recap | Week Ahead | FOMC Meeting

Inflation is the one form of taxation that can be imposed without legislation. – Milton Friedman

Last week's market recap:

The S&P 500 closed the week down -.09%. Year-to-date the index is up 7.63%
NASDAQ closed the week down -68%. YTD the index is up 6.58%
U.S. Aggregate Bond index was down -1.23%. YTD the index is down -1.72%
10-Year Treasury Rate increased, ending the week at 4.31% up from 4.09% the prior week
- Fed Funds Target rate remains at 5.25-5.50%
The 1-Year Treasury is yielding 5.09%
A 6 Month Treasury is yielding 5.34%
- Short term rates are trending lower. Reinvestment Risk for short term debt remains elevated.

The week ahead:

Housing Starts and Building Permits
Earnings: Nike, FedEx, General Mills, etc.
Fed Meeting
Friday deadline for Congress to pass spending legislation to avoid a government shutdown

Last week:

Stocks were mostly flat after a hotter than expected inflation print. Bonds rallied and stocks sensitive to interest rates felt pressure.

FOMC Meeting on Wednesday

Most are expecting the Fed to leave interest rates unchanged this week, but there will be plenty of attention on Fed Chair Powell’s comments after the meeting. Investors will be dissecting rate cut projections and the overall economic outlook. Right now, three rate cuts are expected in 2024.

Inflation Recap:

The Fed raised rates and made it harder (more expensive) to borrow money, which basically decreased the demand for goods. This brought down “goods” inflation. “Services” inflation has only slightly decreased.

Goods Inflation (as seen in the chart below) is roughly 0%. Services Inflation (as seen in the chart below) is roughly 5%. If services inflation drops slightly and goods stay flat, we should be approaching the Fed’s 2% target. But if the Fed cuts interest rates too soon, they risk inflation in everything could heat up.

As always, let us know if you have any questions.

Best,

CRA Investment Committee

Matt Reynolds CPA, CFP®

Tom Reynolds, CPA

Robert T. Martin, CFA, CFP®

Gordon Shearer Jr., CFP®

Jeff Hilliard, CFP®, CRPC®

Joe McCaffrey, CFP®

Phillip Tompkins, CFP®

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