.jpg "Mixed May Jobs Report All But Affirms Upcoming Fed Rate Hikes Photo")
Financial markets saw the high yield primary credit market open up last week, and the investment grade primary credit market’s volumes pick up after a very slow May (actually the slowest May going back to 2012). This followed a strong spread rally to end the month. However, Treasuries and equities were pressured after a mixed May jobs report on Friday. The main read-through from that report affirmed the Federal Reserve (Fed) to be on course for at least two back-to-back half-point hikes. Additionally, Vice Chair Lael Brainard — who was the last Fed speaker to make comments before the June blackout period — stated her support for an additional half-point hike in September if inflation has not subsided by that point.
This week will be light on macro data, with the main highlights being the European Central Bank (ECB) meeting on Thursday and the release of U.S. Consumer Price Index data on Friday. The ECB is expected to start tightening, so watch for any surprises there. Additionally, inflation and consumption expectations could be revised following the release of University of Michigan sentiment surveys on Friday. We will continue to monitor the economic reopening in China as its COVID-19 situation has been improving, with infections down and lockdowns being relaxed. Sentiment feels better this morning, thanks in part to this continued reopening process.
< Go to Monday Morning Perspectives
This blog post is for informational use only. The views expressed are those of the author(s), and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client. Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. The information and opinions contained in this material are derived from sources deemed to be reliable but should not be assumed to be accurate or complete. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. There is no representation or warranty as to the accuracy of the information and Penn Mutual Asset Management shall have no liability for decisions based upon such information.
High-Yield bonds are subject to greater fluctuations in value and risk of loss of income and principal. Investing in higher yielding, lower rated corporate bonds have a greater risk of price fluctuations and loss of principal and income than U.S. Treasury bonds and bills. Government securities offer a higher degree of safety and are guaranteed as to the timely payment of principal and interest if held to maturity.
All trademarks are the property of their respective owners. This material may not be reproduced in whole or in part in any form, or referred to in any other publication, without express written permission.
