Fed Chair Powell testified before Congress this week and didn’t say much we didn’t already know. Markets were already betting on a 71% chance of an interest rate cut in September, so investors were listening for Powell to either affirm their optimism or urge more caution. While he remained reluctant to outright support a near-term interest rate cut, his remarks did not dissuade their hopes of a rate cut in September and markets moved higher through his testimony.
He did acknowledge, however, that the labor market has cooled and “we now face two-sided risks,” meaning they can no longer focus solely on inflation as the unemployment rate rose to 4.1% last month.
Thursday morning, we received the June inflation report that showed price DEFLATION last month. Prices fell -0.1% in June, the first monthly decline since May 2020.
This drop in prices pushed the annual rate of inflation down from 3.3% in May to 3.0% last month.
This pleasant surprise was enough to increase the odds of a September rate cut to 87%. Additionally, markets now see an 85% chance of two 0.25% rate cuts before the end of the year.
Have a great weekend.
Jack C. Harmon II, CFP®, CIMA
Principal, Harmon Financial Advisors
Registered Principal, Raymond James Financial Services
Harmon Financial Advisors, Inc. is an independent, fee-based financial planning firm and an independent Registered Investment Advisor. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. and Harmon Financial Advisors, Inc. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Harmon Financial Advisors, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc.
Keep in mind that individuals cannot invest directly in any index. Past performance does not guarantee future results. Individual investors’ results will vary.
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information in this commercial email has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Harmon Financial Advisors, Inc. and not necessarily those of RJFS or Raymond James.
Investing involves risk and you may incur a profit or loss regardless of strategy selected. International investing involves special risks, including currency fluctuations, differing accounting standards, and possible political volatility.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Investments & Wealth Institute™ (The Institute) is the owner of the certification marks “CIMA” and “Certified Investment Management Analyst.” Use of CIMA and/or Certified Investment Management Analyst signifies that the user has successfully completed The Institute’s initial and ongoing credentialing requirements for investment management professionals.
Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.
Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
