Stock markets had yet another reason to pause their bullish sentiment. On March 13, the Bureau of Economic Analysis reported that the core PCE price index increased 0.4% month over month.
Despite this expected increase, the 20+ Year t-bill ETF (TLT) dropped 49 bps to close at $86.54.
The core PCE figure excludes food and energy. This month, energy prices will rise sharply due to the conflict in Iran. Stock markets will add back the cost of both food and energy in their assessment of real inflation. They will expect that consumers will avoid buying things that they do not need. Appliance manufacturers like Whirlpool (WHR) will struggle. WHR stock traded at a 52-week low last week.
In the auto sector, Ford Motor (F) lost 13% in the last quarter and is down by 21.1% from its 52-week high. Investors flocked to defensive companies. Johnson & Johnson (JNJ) is up by 70.7% from its 52-week low. The firm is also posting positive developments for its drugs. It reported an 89% complete response in the Phase 1 trial of its bladder cancer therapy, Erda-iDRJS.
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