• US stocks have traded slightly higher over the past week as markets continue to digest tumult in the banking sector, mixed economic data, and the continued impasse on the nation’s debt ceiling negotiations. With the Fed now approaching the end of its interest rate tightening cycle, the key question is how long interest rates will remain at elevated levels, and whether the economy will fall into recession because of the Fed’s moves.
• April inflation data released Wednesday was in-line with market expectations. Annual inflation was 4.9%, down slightly from 5.0% in March; core inflation was 5.5%, also down from the prior month. As of Wednesday afternoon, the market’s response to this news was lackluster, suggesting greater inflation reductions will be needed to influence the Fed’s actions moving forward.
• For both the financial markets and the economy, the next several weeks will be dominated by the ongoing standoff on the debt ceiling debate. Failure to agree on some type of increase in the ceiling could prove catastrophic nationally as well as globally. At this stage, both political parties appear to be intransigent.
DISCLAIMER: The information provided in this blog post is for informational purposes only and should not be construed as financial advice. Investment decisions should be based on individual financial goals, risk tolerance, and consultation with a qualified financial professional.