Market Minutes for May 13, 2024

This past week, consumer confidence experienced a decline, falling to 67.4 in May. Despite the weaker income growth observed in the early part of 2024, consumer spending has shown remarkable resilience. Real wages have continued to stay positive, contributing to an overall stable economic outlook.

Looking ahead, several key economic indicators will provide critical insights into the health of the economy and potential future market movements. These indicators include the Consumer Price Index (CPI), the Producer Price Index (PPI), retail sales, and housing starts. Monitoring these will be essential for understanding the trajectory of economic growth and consumer behavior.

Although the personal saving rate has decreased to 3.6% for the quarter and dropped further to 3.2% in March, this volatility is not entirely unexpected. Historically, the personal saving rate has fluctuated, and it currently remains below its long-term average of 8.5%. During the pandemic years, government aid significantly boosted personal savings. As this aid began to fade in 2023, consumers adapted by increasing their credit card debt to maintain spending levels. Despite the decrease in personal savings, several positive trends persist. Wage gains have consistently outpaced inflation for over a year, and household wealth saw an 8% increase in 2023. Consumer sentiment remains optimistic, with an impressive 14.2% year-over-year increase, suggesting that the spending trend will likely continue.

In terms of index performance over the past week, the NASDAQ experienced a slight decrease of 0.18% but remains up 24.83% over the past three years. The MSCI Emerging Markets Index increased by 0.99% over the week, showing resilience in these markets. Despite a minor weekly dip of 0.47%, the S&P 500 has performed robustly over the long term.

The fixed income market showed mixed results, with some fluctuations in yields. High yield bonds remained stable at 8.10%, while U.S. corporate bonds saw a slight decrease in yield to 5.55%, reflecting some market pressures. Municipal bonds, particularly the 10-year bonds, maintained a stable performance with a yield of 3.23%.

Key interest rates also showed stability and slight fluctuations. The prime rate held steady at 8.50%. The 30-year fixed mortgage rate saw a slight decrease to 7.18%. The yield on 10-year U.S. Treasuries stood at 4.50%, indicating investor confidence in long-term stability.

Commodity markets presented a mixed picture. Gold prices slightly decreased to $2,372. Oil prices, specifically West Texas Intermediate (WTI), are currently at $79.26 per barrel, reflecting market dynamics. Natural gas prices remained stable at $2.30, showing consistency in energy markets.

In the currency markets, the USD/JPY exchange rate increased to 155.88, indicating a strong U.S. dollar. The USD/GBP exchange rate remained stable at 1.25. The USD/EUR exchange rate saw a slight decrease to 1.08, suggesting a slight strengthening of the euro.

As we look ahead, it is crucial to monitor the upcoming economic indicators. While the saving rate remains low, consumer spending has shown resilience, driven by positive wage growth and household wealth. The market continues to navigate through these dynamics, presenting opportunities and challenges. At Modern Wealth, we remain committed to providing you with the latest insights and strategies to navigate these economic conditions effectively.

Source: Weekly Market Recap, May 13, 2024, provided by J.P. Morgan Asset Management​