Market Notebook

PRICE ACTION:
Equity prices, as measured by the ticker SPY, and bond prices, as measured by the ticker BND, both closed lower over the last week.

SPY -0.59%
BND -0.75%

TECHNICAL ANALYSIS:
SPY price appears to be in consolidation.

BND price appears to be in a downward trend.

SENTIMENT:
The VIX closed the week at 18.58, fractionally below the prior Friday’s 18.77. Rate-expectation pricing shifted meaningfully as Fed funds futures now reflect the possibility of a 25 basis point hike at the July 29 meeting. The hold scenario still the base case.

ECONOMY AND FUNDAMENTALS:
The week’s most consequential economic release came Thursday. Initial jobless claims for the week ending July 18 fell to 187,000, sharply below the prior week’s 212,000 and the consensus expectation of approximately 209,000. The print affirmed that the U.S. labor market remains historically tight, reinforcing the case for the Federal Reserve to maintain or even tighten its policy stance.

In commodities, WTI crude oil settled higher compared to the prior Friday, driven by renewed geopolitical risk premium as Middle East tensions continued to escalate. The oil move contributed to the shift in rate-hike expectations, as higher energy prices complicate the Fed’s inflation calculus.

The coming week is an important macro data release week. Expect possible pricing turbulence if the Federal Reserve were to raise interest rates.

All the best during the week ahead!

Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.