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Market Recap – March 18, 2024

Keel Point

March 18, 2024

The CPI and Producer Price Index (“PPI”) inflation news last week frightened financial markets and raised the specter that the Fed will delay further cutting interest rates.  The 10-year Treasury rate ticked up 22 basis points to 4.312%, and the S&P 500 fell Thursday and Friday to close down 0.13% from the prior week close.  The S&P 500 remains up 7.28% so far in 2024.

  • The annual rate of core CPI inflation edged down to 3.8%, from 3.9%, but the three-month annualized rate accelerated to 4.2%.
  • The Producer Price Index for all final demand goods and services over the last 12 months was 1.6%, and 2.8% excluding food and energy, but higher than the 12-month period ending in January. The bigger than expected February monthly increase in the PPI was principally due to a 4.4% m/m increase in energy.
  • Consumer sentiment (U of Michigan) edged down last week, mostly because of the rebound in gasoline prices, with the national average closing in on a four-month high of $3.50 a gallon.
  • The Fed meeting announcement on Wednesday at 2 p.m. is likely to provide no guidance for or against rate cuts in the future. Their release of an updated Summary of Economic Projections likely will show rate cuts later in the year and a slightly higher GDP forecast for the end of this year.

At a macro-economic level, the U.S. economy has surpassed the rest of the world in how it has rebounded from the pandemic led global economic shut-down in 2020.

  • In the 2-1/2 years since Covid related recession, nominal GDP has increased by 40% — amazing.
  • Inflation is an unfortunate by-product of massive fiscal and monetary stimulus, but job, wage and productivity growth have provided an enormous “benefit of moving millions of lower-income workers to better jobs, more income security, and/or running their own businesses,” (Adam Posen, president, Peterson Institute, reported in Axios)

 

 

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SIPC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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