Wednesday, June 16, 2021
After record recent inflation data, worries over continued higher inflation later this year are soaring. Here are some things to think about though:
- We see inflation potentially upwards of 3% this year but remain in the camp that it won’t be much more than that and it will eventually come back to trend.
- The media might be worried, but the market isn’t. For example, the 10-year Treasury yield peaked in late March. If true inflation worries were here, we doubt that would be the case.
- Various commodities also peaked recently. Things like copper, corn, soybeans, and lumber. Again, potentially showing calming in the overall inflationary worries.
- Lastly, the 5- and 10-year Breakeven rates (a measure of expected inflation) both peaked last month as well, yet another sign of calming inflationary worries.
- We will take a look at inflation and did it just peak more today on the LPL Research blog, available at 12:00 p.m. ET.
U.S. markets point toward a mixed open amid today’s Federal Reserve decision on interest rates and policy later this afternoon
- The Dow Jones Industrial Average is down a fraction while the growth-laden Nasdaq Composite opened marginally higher.
- European stocks are up a fraction as tensions remain high with President Biden and President Putin set to meet.
- Asian markets are mostly lower as China’s factory output and retail sales missed expectations last month.
All eyes on the Federal Reserve (Fed) meeting today
- The Fed wraps up its two-day Federal Open Market Committee (FOMC) meeting today with a new set of economic and interest rate projections.
- Markets are expecting no changes in its interest rate or bond buying programs, but the Fed could signal an earlier “lift-off” of its short-term interest rate policy.
- While we’ll be watching for any changes in the data releases, we’ll also be watching Chairman Powell’s press conference at 2:30 p.m. ET today, which will likely provide more details on the future path of monetary policy.
- We will summarize the details of this (expected) moderately interesting Fed meeting and the related press conference on Thursday, June 17, on the LPL Research Blog.
LPL Research in the Media
LPL Financial Chief Market Strategist Ryan Detrick was on Yahoo! Finance recently to discuss current trends. You can watch the full interview here.
Ryan was also quoted in USA Today talking about what could happen the second half of this year, while LPL Financial Equity Strategist Jeff Buchbinder was quoted by the Washington Post on inflation.
Sustainable Investing Becoming Mainstream in Fixed Income
Sustainable investing is becoming more mainstream in fixed income markets and companies that recognize that changing dynamic may be able to avoid financially material impacts. Learn more in this week’s Weekly Market Commentary.
New Highs in Inflation and Stocks
On this week’s LPL Market Signals Podcast, LPL Research looks at the better than expected market highs, inflation concerns, and sustainable investing in the fixed-income market.
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