As of close of 2nd Quarter 2023

Stubborn Inverted Yield Curve

Inflation Moderates

Slowing US Economy

Market Recap

  • Relatively low energy costs aiding the Fed Reserve’s mission of lowering inflation. Oil has been trading in $70s/barrel while natural gas prices bottomed at in the low $2s off from previous high of $5.90 in Q32022.  Additionally, important raw materials such as aluminum and lumber have seen 52-week lows in the 2Q2023.
  • Yield curve remains inverted, while the spread widened between 2YR and 30YR yields during the 2nd quarter vs the Q12023.
  • Inflation moderates and Fed pauses rate hikes.

Market Outlook

  • We expect the Fed Reserve to remain paused in rate hikes while they monitor the lagging effects from their QT policies. Business activity is contracting, and prices are coming down, the Fed should take a wait and see approach now.
  • A “soft landing” could be a true outcome and we may avoid a harsh recession going into the 3rd and 4th
  • Residential housing market could make or break the US consumer. Housing prices are slightly declining with higher interest costs, yet we are seeing a reduced number of homes being listed for sale which could help stabilize home values and consumers’ confidence.