Weekly Market & Economic News Recap (Week of June 12, 2023)

• Federal Reserve officials’ concerns about stubbornly high inflation could lead them to signal that they are prepared to lift interest rates again this year even if they hold them steady on Wednesday. (Wall Street Journal, June 13, 2023, https://www.wsj.com/articles/fed-rate-projections-could-rise-to-underscore-inflation-anxieties-496a0a60?mod=economy_more_pos9)

• Inflation fell in May to around half last year’s peak but remained elevated, showing Federal Reserve officials made progress in cooling price pressures but could have more work to do. The consumer-price index rose 4% last month from a year earlier, well below the recent peak of 9.1% last June and down from April’s 4.9% increase. (Wall Street Journal, June 13, 2023, https://www.wsj.com/articles/consumer-price-index-report-may-inflation-cafcbef5?mod=economy_more_pos8)

• Federal Reserve officials agreed to hold interest rates steady after 10 consecutive increases but signaled they were prepared to raise rates next month if the economy and inflation don’t cool more. (Wall Street Journal, June 14, 2023, https://www.wsj.com/articles/fed-holds-rates-steady-but-expects-more-increases-b1be87f2?mod=economy_more_pos5)

• Treasury yields rebound after fed signals higher rates ahead. Market reaction still suggests skepticism that Fed will follow through on forecasts. (Wall Street Journal, June 14, 2023, https://www.wsj.com/articles/treasury-yields-rebound-after-fed-signals-higher-rates-ahead-b12dd481?mod=markets_major_pos13)

• Spring spending surge pushes growth despite rate rises. Retail sales rose 0.3% in May after a strong April gain. (Wall Street Journal, June 16, 2023, https://www.wsj.com/articles/us-economy-retail-sales-may-2023-c9ddefcb?mod=economy_more_pos1)

• S&P 500 finishes higher for fifth straight week. Stock indexes drop from Thursday’s 2023 highs but end the week in the green. (Wall Street Journal, June 16, 2023, https://www.wsj.com/articles/global-stocks-markets-dow-news-06-16-2023-ef7ceed4?mod=markets_lead_pos2)

• S&P 500 Above 4,400 Leaves No Room for More Gains, Citigroup Says. Bank initiates 2024 mid-year target of 4,400 on US stock index. Firm admits it missed AI euphoria, but still wary of recession. (Bloomberg, June 16, 2023, https://www.bloomberg.com/news/articles/2023-06-16/citigroup-says-s-p-500-above-4-400-leaves-no-room-for-more-gains?srnd=markets-vp)

• Fed warned that a rate cut is still a couple of years away. Rising funding costs increase the risk of defaults and distressed exchanges as firms struggle to adapt to a shrinking money supply (Bloomberg, June 17, 2023, https://www.bloomberg.com/news/articles/2023-06-17/powell-wake-up-call-means-more-corporate-defaults-credit-weekly?srnd=economics-v2)