This morning, the Commerce Department will report the personal consumption expenditures price index. The Fed scrutinizes this figure closely. Although it is unlikely to change by much, the data, which excludes volatile food and energy prices, will move stock markets.
Ahead of the report, treasury bond yields were mixed. The six-month T-bill rose by 0.45% while the 30-year dropped by 1.0%.
Income investors are most nervous. A small change in the data would keep interest rates higher. This decreases the attractiveness of holding stocks like AT&T (T) or Verizon (VZ).
On Thursday, the initial weekly jobless claims were 233,000, down by 6,000 from the previous week. The recurring jobless claims increased to levels not seen since late 2021. As unemployed people take longer to find a job, consumer goods stocks will underperform. Watch for firms like General Mills (GIS) or Conagra Brands (CAG) to trend lower.
The National Association of Realtors reported pending home sales fell by 2.1% in May from the prior month. Homebuilder stocks already traded lower before the NAR released the data. D.H. Horton (DHI), Zillow (Z), Opendoor (OPEN), and Redfin (RDFN) will continue to underperform. Mortgage demand and home sales will struggle unless rates fall meaningfully. 25 bps cuts this year will not change anything.
