.jpg "The S&P 500 Marches Higher Photo")
The S&P 500 Index moved to record high territory last week, breaking through the psychologically important 5,000 level on Friday.1 In contrast to the ”everything rally” during the final two months of 2023, equities are reaching new heights this year without the support of falling Treasury yields and imminent Federal Reserve (Fed) rate cuts. Bond investors keep pushing out the timing of the first Fed rate cut, with March now becoming unlikely.2
After unexpectedly strong economic data this year, bond investors will look for better news on the inflation front this week. Tuesday’s consumer price index (CPI) report and Friday’s producer price index (PPI) are expected to provide further evidence to Fed policymakers that inflation is moving closer to its 2% target.3 Thursday’s retail sales report will be closely watched for any signs of cracks forming in the U.S. consumer’s resilience in the face of higher interest rates.
Sources:
1CNBC – S&P 500 closes above 5,000 for first time ever, notches fifth straight winning week: Live updates; 2/9/24
2BNN Bloomberg – Bond Traders Cave to the Fed by Dialing Back Their Rate-Cut Bets; 2/11/24
3MarketWatch – U.S. Economic Calendar; as of 2/12/24
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