Markets kicked off the new month by taking in a large number of Q2 earnings reports and a healthy calendar of economic reports in a challenging week for risk assets. The S&P 500 broke a three-week win streak by posting its worst week since the March banking sector turmoil, falling 2.27% while most other major indices joined the S&P in the red including the Nasdaq (-2.85%), Russell 2000 (-1.22%), international developed (- 3.06%), and emerging (-3.3%) markets. Bond yields declined through 5yr maturities but increased beyond that adding to a string of volatile weeks in the bond markets. WTI oil increased 2.7% but most other commodities declined on the week while the USD enjoyed a risk off bid, increasing 0.39% on the week.

• Equity markets have experienced some consolidation to begin August on the back of two strong months due to a combination of rising yields, policy uncertainty, and an overbought/overvalued market conditions reminding us the S&P 500’s reliance on mega caps cannot extend indefinitely.

• Bond yields fell on shorter maturities and rose across longer maturities, ending with yields of over 4% across the entire yield curve. Large Q3 Treasury issuance, labor market dynamics, and perhaps a marginal nod to the Fitch downgrade contributed to these moves.

• Whether or not we’re out of the woods of inflation could be a significant determinant for financial markets over the next 12-24 months with unexpectedly renewed inflation pressures a primary risk to risk asset returns.

• The bullish narrative of peak Fed funds rate/soft landing from here stands opposed to the bearish narrative of higher for longer and lagged effects of the very aggressive tightening cycle yet to work its way fully into the economy.

• BCA Research notes while valuations have little predictive value over the short term, they are a significant determinant to longer term (strategic) investing outcomes as evidenced by a simple regression on P/E multiples and subsequent returns on the S&P 500.

• Bianco Research noted the SLOOS cyclical and balance sheet pressure on small and mid-sized banks is translating as expected to tightening lending standards, posing a headwind to economic growth looking forward.

• Fitch Ratings’ downgrade of U.S. debt from AAA to AA+ grabbed headlines (and podiums) but did not translate to any meaningful market impact. Analysis by JPM and the ratings agencies suggests a one notch downgrade by all three agencies narrows yields by approximately 8bps.

• Chile became the first major emerging market central bank to cut rates (-100bps) and signaled more rate cuts are likely to follow.

• July payrolls increased by a less than expected 187,000 (200,000 expected) and the unemployment rate fell from 3.6% to 3.5%. Average Hourly Earnings growth remained at 4.4% (0.4% MoM), against consensus calling for a decline.

• June’s JOLT Survey revealed 9.582M job openings, slightly under consensus forecast of 9.650M but within the forecast range.

• July’s ISM Manufacturing Index registered 46.4, in line with the spot consensus forecast of 46.5.

• Eurozone 2Q GDP registered 0.3% q/q, returning to positive growth following a 0% Q1 and -0.1% Q2. Headline inflation eased from 5.5% to 5.3%.

• Stretched valuations, overbought technicals, decent earnings, resilient growth, strong labor markets, and a resulting mixed outlook for inflation/monetary policy suggests a differing short-term versus cyclical outlook for risk assets.

• The FOMC meeting delivered the expected 25bps hike to Fed Funds, increasing it to 5.25%. They stopped short of overtly signaling a pause, opting for a ‘meeting by meeting’ approach. Nothing changed in the post- meeting statement while Powell’s post-meeting presser acknowledged favorable inflation trends and resilient (too?) labor markets.

• The ECB meeting last week delivered the expected 25bps hike taking the deposit rate to 3.75%, equivalent to the October 2000 record high, the refi rate to 4.25%, and marginal lending facility rate to 4.5%. The BOJ kept rates unchanged but surprised markets by changing its YCC program.

• Refinitiv IBES data at the midway point of Q2 earnings season has earnings declining 6.4% alongside upside earnings surprises at 78.7% and revenue surprises at 64%.

• Public equity valuations aren’t alone in the lofty zone. Private equity (buyout) valuations look very stretched relative to historical ranges with year-end 2022 sporting purchase price multiples of 13x and debt multiples over 7x.

• China’s Politburo signaled only targeted stimulus measures as opposed to broad based fiscal or monetary loosening. The Hang Seng fell 2% on the announcement.

• Russia’s refusal to renew the Black Sea Grain Initiative after expiration on July 17th raises supply side risks in ag markets. Wheat and corn prices have surged by 16% and 11%, respectively since Russia’s action.

• Second quarter U.S. GDP came in well above the spot consensus forecast (2.4% vs 1.5%) and more in line with the Atlanta Fed GDPNow modeled forecast. Personal Consumption Expenditures of 1.6% came in slightly ahead of consensus but within the 1.1%-4.1% range.

• June PCE inflation data showed continued deceleration with headline readings of 3.0% YOY / 0.2% MoM alongside core readings of 4.1% YOY / 0.2% MoM.

• Second quarter Employment Cost Index grew 1% versus spot consensus of 1.1% and a forecast range of 1.0%-1.3%, a reduction from Q1 reading of 1.2%.

• Personal Consumption Expenditures of 0.5% ticked higher and slightly exceeded estimates while Personal Income of 0.3% fell slightly under the spot forecast.

• July U.S. flash PMI (C,M,S) registered 52.0, 49.0, 52.4 with manufacturing exceeding the forecast of 46.0 and services falling short of consensus forecast of 54.0.

• July’s flash non-U.S. PMIs (C,M,S) for the Eurozone (48.9,42.7,51.1) and UK (50.7,45.0,51.5) revealed some downside surprises.

• Consumer Confidence reading for July registered 117.0, well above consensus estimate of 111.8 and the forecast range of 108.0-116.0. July’s final revision to UofM Consumer Sentiment took it down from 72.6 to 71.6.

• The June Durable Goods Orders reports on New Orders (4.7% vs 0.5%), Ex-Transportation (0.6% vs -0.1%), and Core Capital Goods (0.2% vs -0.1%) beat consensus forecasts across the board.

• Case-Shiller Home Price Index for May posted a gain MoM of 1% versus consensus estimate of 0.8% and a YOY decline of 1.7% versus a consensus call for a 2.5% decline.

• New (697k) and Pending (0.3%) Home Sales were both within their respective forecast ranges.

Market drivers last week included second quarter earnings reports and a continuation of U.S. disinflation and economic soft landing themes. The S&P 500 and NASDAQ both marked 15-month highs, closing up marginally for the week. Bonds traded down slightly with interest rates rising in the belly of the curve (2y, 3y, 5y) while the 10yr yield remained largely unchanged at 3.84%. The USD (+1.16%) and commodities (+2.17%) both edged higher on the week with the energy complex leading the way.

• A look at equity market technicals shows we may be somewhat extended (overbought) in the short term, the longer-term trend remains constructive.

• Liz Ann Sonders posted a useful illustration highlighting the notable improvement in breadth (participation/leadership) we’ve seen since early June and Bianco Research followed that note with a similar observation through a market cap lens.

• Q2 earnings season, with 18% reporting, has a blended earnings decline of 9.0% and revenue of -0.3%. The street is still projecting recovering earnings growth in the second half with 3Q estimates of +0.1% and 4Q of +7.5%.

• We’ve seen some material USD weakness following the U.S. CPI report triggering debate as to what exactly this weakening USD may be signaling.

• Expectations of a U.S. recession have receded slightly with the soft core CPI report feeding a soft landing narrative backed by sustained consumption, a resilient labor market, and robust service sector activity. The counter argument, however, is supported by recessionary manufacturing conditions, restrictive monetary policy, weak LEIs, and a deeply inverted yield curve.

• An FT article highlighted positive trends in private debt with demand supported by the high costs of public issuance, fewer reporting obligations, loss of business/operational control, and less rigor surrounding related party transactions.

• Bloomberg noted home equity dry powder has increased 56% over the past three years; Black Knight estimates the magnitude at $28.7t ($9.3t accessible at 20%).

• A lackluster reopening trend and weak GDP report has China signaling potential stimulative measures including a currency peg adjustment, relaxed mortgage requirements, and potential rate cuts.

• A Bloomberg article last week highlighted a significant increase in bankruptcies reaching the highest levels since 2010 but the article sparked some intense debate on the BCA Research weekly research call.

• June headline Retail Sales came in below expectations (0.2% vs 0.5%) but ex-vehicles (0.2% vs 0.3%) and ex- vehicles & gas (0.3% vs 0.3%) readings were both more in line with consensus.

• The four week moving average of Initial Jobless Claims fell from a near-term high on June 24th of 256,750 to last week’s level of 237,500.
• Industrial Production in June was soft, well under forecasts (-0.5% vs 0.0%) as were the Manufacturing Output (-0.3% vs 0.0%) and Capacity Utilization (78.9% vs 79.5%) readings.
• July’s Housing Market Index came in right at the consensus forecast of 56 after rising 5 points to 55 in June.
• June Housing Starts (1.434M vs 1.48M) and Permits (1.440M vs 1.483M) both came in below forecasted
• levels but within the larger consensus range.
• June Existing Home Sales cooled slightly from May’s reading to 4.16M.

Markets followed up a holiday shortened week with a healthy rally across risk assets on the back of an abbreviated but favorable economic calendar and a ‘relative’ good start to second quarter earnings season. U.S. equity markets posted a nice rally, up 2.5%-3.5% across the cap spectrum while developed (+4.2%) and emerging (+4.1%) international rallied even more so, benefiting from a notably weakening USD (- 2.3%). Interest rates 2yrs and beyond pulled back a fair amount leaving the 10yr UST (-0.23%) back to 3.83% while commodity markets posted a relatively broad-based rally across energy, grains, and industrial metals.

• With a relatively narrow market driving the S&P 500 up 17% year to date and 23% off the October 2022 low, concerns are bubbling again regarding short term overbought conditions. However, we are seeing improving breadth and participation over the past few weeks.

• The 2Q earnings season began last week by weaving a silver lining on a red earnings number (blended – 7.1%) with strong beat rates (80%) and beat magnitudes (8.8%). Revenue is coming in at -0.4% with historically average beat rates (63%) and beat magnitudes (1.6%).

• MRB highlighted the ‘Implausible Trinity’ of central banks’ mission of providing liquidity enough to maintain relatively constructive sentiment, support risk asset prices, tighten monetary policy sufficient to achieve a 2% core inflation rate, and sustain global economic growth.

• Inflation dynamics, labor market, and ensuing Fed policy are key market variables at this time and an item of note was last week’s low CPI print not influencing July fed funds futures at all and in fact, the probability of a 25bps rate hike increased to 96%.

• Bianco Research is making a strong point that the CPI base effect from 2022 inflation readings suggests the July – December window will be much more challenging to maintain the same deflationary trends that what we’ve seen in the first half.

• While the inverted yield curve is suggestive of recession historically, the long end today is clearly influenced by the Fed’s 2.5% long-term equilibrium rate as well as QE.

• BCA Political Research estimate on government spending impact on 2024 GDP from the 2023 FRA and SCOTUS decision on student debt forgiveness to modify the fiscal drag from -0.12% to 0.49% in 2024.

• A healthy consumer thanks to a robust job market and well capitalized balance sheets (excess savings) have a significantly larger influence on U.S. GDP than government spending.

• A Stanford research paper on work from home trends estimated average commuter time savings of 72 minutes per day (2 weeks/yr) and a value to workers of approximately 8% of their salaries – suggesting employees would take a pay cut to maintain work from home privileges.

• Markets received more indications of China’s weak post-reopening recovery in the form of deflationary readings for CPI (0%) and PPI (-5.4%).

• June CPI declined further than expected on both headline (YOY 3%a vs 3.1%e) (MoM 0.2%a vs 0.3%e) and core (YOY 4.8%a vs 5%e) (MoM 0.2%a vs 0.3%e) readings.
• Consumer Sentiment improved by a larger than expected margin, registering 72.6 versus consensus estimate of 65.5.
• The June NFIB Small Business Optimism Index improved to 91 from an 89.4 reading in May, above consensus forecast of 89.8 and the forecast range of 89.0-90.3.

Overbought conditions, dampened sentiment, and continued hawkishness from global central bank officials combined to snap a five-week winning streak for the S&P 500 last week. Sticky inflation pressures and softening economic data added to a risk-off tone last week where extended global equity markets took a pause. The week saw the S&P 500 close down 1.4% while developed (-3.5%) and emerging (-4.5%) markets fell further. Interest rates didn’t move much either way but commodity markets softened on the dampening global growth sentiment where WTI closed the week back below $70. The risk-off tone translated to a bid for the USD which closed 0.65% stronger on the week.

• A pricey and top heavy S&P 500 which has rallied 23% since October has investors on edge but BCA issued a reminder that valuations aren’t a very reliable short to intermediate term market buy/sell indicator.

• Markets digested a slew of hawkish Fed speakers last week with a dot plot backdrop showing zero of 18 members projecting any rate cuts in 2023 and a median Fed Funds rate at the end of 2024 only slightly lower than year-end 2023 projections.

• Markets have been increasingly pricing in the more hawkish Fed narratives. As recently as May 3rd, year- end Fed Funds projections were 4%, they are now over 5%.

• The BoE hiked rates 50bps last week, more than markets expected (25bps), joining Canada and Australian central banks who have surprised markets on the hawkish side of the ledger.

• A contrarian note from Bianco Research projects the July CPI release will be the 2023 low, forcing the Fed very much in the higher for longer camp.

• If leading economic indicators and inverted yield curve were the only metrics you monitored, the supporting case for recession would be overwhelming with May’s LEI registering a 14th straight monthly decline and the duration and depth of yield curve inversion both in rare form.

• A research note from Pictet illustrates very clearly how the TINA regime is a thing of the past, at least for now, with earnings yields, corporate bond yields, and T-bill yields fully converged – something we haven’t seen in decades.

• • June’s flash U.S. PMI readings (C, M, S) of 53, 46.3, 54.1 reflected additional deterioration in the manufacturing sector but surprised on the upside across the service sectors.

  • June’s flash non-U.S. PMIS looked like U.S. readings with manufacturing readings of Eurozone (43.6), UK (46.2), Japan (49.8), and Australia (48.6) alongside service sector readings of Eurozone (52.4), UK 53.7), Japan (54.2), and Australia (50.7).

  • The Housing Market Index in June continued to rebound to 55, surpassing both spot forecasts of 50 and consensus range of 48-52.

  • Housing Starts (1.631M) and Permits (1.491M) surpassed consensus estimates and registered above (starts) and at the high end (permits) of their respective forecasted ranges.

  • Existing Home Sales of 4.30M came in above the 4.25M consensus estimate and at the high end of the range. This release was 0.2% above prior month and -20.4% YOY.

• The FOMC met market expectations by ‘skipping’ June but made clear in the post-meeting press conference that future hikes are on the table. The ECB stepped down to a 25 bps hike following a path of two 75 bps and three consecutive 50 bps moves while the BOJ made no changes.

• U.S. inflation numbers eased slightly in May creating a little more breathing room for Fed officials to skip in June and wait on more data for the July decision which is now trading at a 60% probability for a 25 bps hike.

• Consumer surveys are adding to the disinflation narrative with UofM and NY Fed responses showing 1yr forward expectations falling materially while longer term expectations have remained relatively anchored under 3%.

• Yield curve slope indications for growth and monetary policy conditions have changed meaningfully. The 3m/10yr slope has ‘flattened’ from peak inversion of -1.89% to -1.57% while the 2yr/10yr has ‘deepened’ from -0.72% to near record inversion of -0.93%.

• The past couple weeks had seen breadth measures improve but still leaves the S&P 500 well into short-term overbought territory with 14-day RSI above 70, 2.37 standard deviations above the 200 dma, and 2.85 standard deviations above the 50 dma.

• The latest data on banks’ aggregate holdings indicate loan portfolios slightly above pre-SVB levels and deposit balances at March 22nd levels – following three straight weeks of outflows.

• With over 40% of banks reporting tightening lending standards, a BCA research study noted that on average, private credit outperformed private equity by 40%-50% over the following five years and by 10%-20% over the following 7rys with no adjustment for risk disparity in either case.

• The case for a stimulus response in China grew last week with property investment (-7.2% vs -6.7%), decelerating retail sales (12.7% vs 13.7%), industrial production decelerating from 5.6% to 3.5%, and new home prices falling 0.1% MoM.

• An OPEC report projecting 2023 oil demand at 2.3mbpd above 2022 levels served to boost oil prices and offset weak growth/recession price action early in the week. Some would argue that may be under appreciating potential demand destruction as we approach year end.

•  CPI inflation in May was generally in line but cooled versus April’s reading with headline and core readings of 4% and 5.3% respectively alongside MoM of 0.1% and 0.4%. Headline readings were slightly under consensus while core reads were spot on.

• Producer Prices (PPI) in May cooled more than forecasted with YoY headline (1.1% vs 1.6%), core (2.8% vs 2.9%), and super core (2.8% vs 3.3%) all below consensus. MoM numbers were also soft with headline (- 0.3% vs -0.1%), core (0.2% vs 0.2%), and super core (0.0% vs 0.1%).

• May’s NFIB Small Business Optimism Index of 89.4 was slightly better than consensus 88.4 and above the forecast range of 87.5 to 89.0.

• Retail Sales for May stayed healthy, beating the forecast (0.3% vs -0.1%) and landing at the high end of the range. Ex-vehicles (0.1% vs 0.1%) and ex-vehicles & gas (0.4% vs 0.2%) were both at and above estimates respectively.

• Industrial Production for May slipped -0.2%, below consensus estimate of 0.1% and at the low end of the forecast range.

• U of M Consumer Sentiment for June came in above consensus (63.9 vs 60.0) and the high end of the range of estimates (59.4 to 63.0).

• Weekly Jobless Claims again surpassed estimates (262k vs 248k) and the four-week average increased from 237.5k to 246.75k.

• A table this week from Bespoke reminds us of the old saying ‘be greedy when others are fearful and fearful when others are greedy’ illustrating returns following three recent reasons to be fearful (debt ceiling, SVB bank failure, Fed rate hiking cycle)
• Thankfully, the debt ceiling was suspended for a sixth time last week in a last minute budget negotiation compromise. Not thankfully, we have $30t in outstanding debt and zero political will on either side to address any actual material budget issues.
• Large caps record outperformance over small caps and U.S. outperformance over non-U.S. can be, at least partially, explained through an examination of sector weighting differences with growth stocks (NASDAQ) leading the way and more prevalent in U.S. markets.
• Economic reports last week took some pressure off the FOMC with respect to a June rate hike with unemployment edging higher and wage growth slightly below consensus. The June Fed Funds contract is now pricing a 76% “hold-steady” rate decision and 24% on a 25 bps hike.
• The combination of a slowing economy and substantially higher interest rates (debt service) has led to a notable increase in leveraged loan defaults.
• A BCA Commodity and Energy Strategy research note predicted China’s CCP will be announcing a new round of credit led policy stimulus shortly to address fledging economic growth.

• • The May Employment Report registered 339,000 jobs, well over consensus 190,000, but the unemployment rate rose to 3.7%. Participation Rate stayed at 62.6% while average hourly earnings were in line with consensus for both MoM (+0.3%) and YoY (4.3%).

  • The April JOLT Survey showed job openings increasing 3.67% to 10.10mm but down 14.05% from one year ago.

  • Eurozone headline and core inflation eased to 6.11% and 5.3% respectively, both cooling off from prior month readings.

  • The March Case-Shiller Home Price Index rose 0.42% from the prior month and +0.63% YoY.

A light economic calendar, the unofficial end to Q1 earnings season, ongoing debt ceiling negotiations, and ample FedSpeak were primary drivers behind the capital markets last week in what amounted to some risk-on price action. Equity markets posted solid gains on the week. The S&P 500 was up 1.65% marking a fresh YTD high (+9.2%) while developed (+0.71%) and emerging (+1.12%) markets weren’t far behind. Year to date global equity markets have returned 9.5% with developed international (+12.2%) offsetting the emerging markets (+2.9%) and U.S. markets in line. Rates jumped sharply higher across the curve last week, taking the 10 yr UST yield back up to 3.7% while both commodities and the USD edged higher.

• Charlie Bilello updated his CNBC “Markets in Turmoil” fail safe go long market signal, illustrating very clearly the “be greedy when others are fearful” rule of thumb. This S&P 500 rally does seem to be lacking breadth, despite marking a YTD high last week, and has been range bound.

• Much like Wall Street earnings forecasts, consensus economic forecasts too have been well below the mark as evidenced by the surging Bloomberg Economic Surprise Index.

• Alpine Macros’ look at the Fed Senior Loan Officer Opinion Survey illustrates a significant shift tighter in CRE lending standards along with a dramatic fall in loan demand.

• Fedspeak last week saw hawkish comments from Bullard, Logan, Barkin, Mester, Bostic, and Kashkari countered by a doveish but undecided Goolsby. Powell’s remarks Friday echoed past statements but market based expectations for a 25 bps hike in June did move briefly higher.

• A surprise hike this month by the BoA and an unexpected inflation acceleration in Canada serve to remind investors and global central banks that monetary policy (risks) remain.

• U.S. politicians are talking tough on the debt ceiling with mid-week signs of progress followed by a breakdown on Friday, putting talks on “pause.”

• The WMT earnings report marks the unofficial end to Q1 earnings season with blended earnings decline of – 2.2% and revenue growth of 4.1%. Forward earnings estimates for Q2 (-6.4%), Q3 (0.7%), and Q4 (8.1%) see recovery eventually but not until year end.

• A Goldman Sachs look at corporate debt shows a move higher in default rates but ample runway when accounting for generationally low coupons, excluding floating rate bank loans.

• The contrarian narrative from MRB to those in the recession camp includes, while inevitable eventually, the cost of capital is not yet at a breaking point for the U.S. economy and delevered private/consumer sectors and the relative importance of CRE vs RRE are tangible positives.

• NY Fed Household Debt and Credit Report showed credit growth slowing from 8.5% to 7.6% in Q1 with a deceleration in mortgages offsetting notable increases in credit card and HELOC debt while credit card delinquencies are beginning to turn higher.

• April Retail Sales were mixed versus forecasts with headline (0.4% vs 0.7%), ex-vehicles (0.4% vs 0.4%), and ex-vehicles & gas (0.7% vs 0.4%) but rebounded from the declines posted in March.

• April Industrial Production beat expectations (0.5% vs 0.0%) as did the reading on Manufacturing Output (1.0% vs 0.1%).

• The Empire State Manufacturing Index fell from 10.8 to -31.8 in May, the second largest monthly drop on record, albeit a notoriously volatile index over recent months.

• The Housing Market Index in May registered 50, ahead of the spot forecast of 45 and the consensus range of 43-46. Starts of 1.401M and Permits of 1.416M were both within consensus range. Existing Home Sales declined 3.3% MoM to 4.28M.

• Initial unemployment claims of 242k was improved over the prior month jump higher to 264k.

Markets last week continued to wrestle with banking sector weakness, the debt ceiling stalemate, and a mixed bag of economic data points. The S&P 500 closed the week down 0.29%, outperforming developed (-1%) and emerging (-2.13%) markets, leaving global equity markets up 8% YTD. Bond yields edged slightly higher with the 10yr UST closing at 3.46% while the USD clawed back a good percentage of its YTD losses, up 1.45% for the week. WTI drifted back down to the $70 support level again, joining industrial metals in taking the overall commodity complex lower on the week.

• Bank balance sheet stress, declining deposits, FDIC seizures, curtailed lending activity, and commercial real estate exposure amount to significant uncertainty surrounding policy, consumer/business confidence, and the overall economic outlook.

• Key banking system monitoring points are deposit outflows and loan/lease growth alongside credit spreads and bond market receptiveness to new issuance.

• The latest IMF Global Financial Stability Report highlighted the stark difference between U.S. and European bank stresses in terms of bond market-oriented balance sheet losses with exposure nearly 2x higher in the U.S. and losses as percentage of Tier 1 capital nearly 5x higher.

• BCA U.S. Political Strategists are assigning a 10% probability of a technical default on U.S. debt thanks to historically high political polarization which may introduce greater risks if the economy proves resilient. Regardless of default, the investment implication is clearly negative.

• MRB is maintaining a contrarian stance on recession highlighting a stabilizing housing market, the poor track record of a contractionary ISM Manufacturing Index, the manufacturing weighted and narrow variable LEI, and resilient unemployment despite the uptick in claims.

• While non-U.S. equities are up 18% in USD terms since the mid-October bottom, momentum has slowed materially over the past two months, defensive sectors have been outpacing the cyclicals, and higher beta geographies have underperformed the U.S.

• Economic data out of China including a sharp decline in aggregate financing and new loan issuance alongside weak PMI and trade data have supported the view of what looks like a lopsided and tempered recovery.

• The BoE met expectations by delivering a 12th consecutive rate increase, hiking rates by 0.25% to 4.5%.

• April’s headline and core CPI readings slowed as expected with headline and core readings of 4.9% and 5.5% respectively. MOM registered 0.4% for both headline and core, as forecasted.

• April’s headline and core PPI also slowed relative to prior month levels and came in below consensus on both headline (2.3% vs 2.5%) and core (3.2% vs 3.3%) readings.
• Initial jobless claims of 264k were well above the 245k consensus and the estimated range of 240k-250k, taking the four-week moving average to 245.5k. Claims are now 82k above the 1yr low in September of 2022.
• May’s U of M Consumer Sentiment survey fell sharply to 57.7, well short of consensus forecast for 63.0 and the prior month reading of 63.5.
• April’s NFIB Small Business Optimism Index deteriorated slightly to 89.0, just below the 89.7 spot consensus and at the low end of the forecast range (89.0-90.0).