Here’s The Asset Guidance Group Outlook for the Week Ahead… 

The last week of the quarter and the first half of 2023 has arrived, and inflation reports will be the focus of a busy calendar. In the U.S., Friday’s Core PCE Price Index may offer insight into whether the Fed’s hawkish view on interest rates is justified. Consumer income and spending figures will also be updated the same
day, while Thursday’s final Q1 GDP reading will be watched for any downward revisions to core PCE, which rose to 5% from 4.4% in the prior estimate. Other U.S. data include consumer confidence, durable goods orders, new and pending home sales, and trade balance figures. The U.S. bank stress test results will be released Wednesday after market close but do not include many of the regional banks that came under fire in March. Overseas, global central bankers convene in Portugal Wednesday for a panel discussion at the ECB Forum. In Europe, flash CPI numbers arrive Thursday for Germany and Friday for the wider Eurozone, with markets already pricing in two more rate increases. Finally, in Asia, the Tokyo core CPI rate is expected to increase only slightly, while China’s PMI readings are anticipated to echo the rest of the world’s results from last week. [1]

Recapping Last Week

Recapping Last Week U.S. equity indexes fell for the first time in six weeks as investors deliberated the effects of future interest rate increases amid signs of global economic cooling. The Nasdaq Composite and S&P500 Indexes slid 1.5%, while the Russell 2000 slumped 3%.
All 11 S&P500 sectors finished lower, with a 4%+ drop in energy stoked by crude oil
prices tumbling 3%+. The Treasury yield curve inversion deepened as 2-year yields briefly surged above 4.8% while the 10-year stalled for a fourth straight week. In
Congressional testimony, Fed Chair Powell stated that more rate hikes are likely this year as U.S. inflation remains well above target. The Bank of England added to global central bank hawkishness with a more aggressive than expected 50bps increase as
services inflation pushes wages higher. Global flash PMIs revealed an intensifying manufacturing slump, while services activity slowed sharply outside the U.S. In housing news, single-family homebuilding surged in the U.S. in May, rising 21.7%
MoM. Builder confidence moved into positive territory in June as rate incentives lured buyers. Existing home sales ticked higher MoM but fell 20% YoY as supply remains constricted by homeowners locked into much lower mortgage rates. The median sales price declined 3.1% YoY to $396K, the largest annual drop since 2011.
U.S. unemployment claims remained elevated at 264K, but continuing claims fell for
the fourth week in six, with the divergence possibly explained by the surge in fraudulent filings this year. Internationally, Chinese equity markets stumbled after the country’s banks reduced mortgage rates less than hoped to support the ailing housing market. Japan’s core CPI accelerated to a 4.3% gain YoY in May, the biggest increase since 1981. In the UK, the BOE’s action was likely influenced by consumer inflation holding steady at +8.7% YoY in May, with core CPI rising to 7.1% from 6.8%.
Higher rates are causing economic pain to British homeowners who face larger mortgage payments, but consumers are thus far handling the headwinds, as retail sales rose in May and June consumer sentiment lifted for a fifth consecutive month.  [2]

Chart of the Week:

Historically, wheat futures (/ZW) aren’t widely followed outside of the agricultural community, but Russia’s invasion of Ukraine sparked interest. Together they used to control 25% of the global market and Ukraine’s production has dropped nearly 30%. Russia is forecast to increase output this year,
however there are questions
around how they will leverage that to finance the conflict. Last year alone Russia changed their export policies on agricultural products a whopping 99 times. Additionally, drought-like conditions in the U.S. have reduced expectations for domestic supply. Wheat prices were cut in half from the highs almost two years ago but have bounced 25% with what appears to be plenty of upward price pressure behind it. 

Click here to view chart. [3]

Sources: [1] [2] [3] tdainstitutional.com tdainstitutional.com; Any performance data reported by Asset Guidance Group, LLC has been grouped and reported by kwanti.com, imported from TDAmeritrade Institutional, Risk categories as scored by Grable-Lytton test and grouped by like risk tolerance levels; NOTE: individual account performance grouped solely by model classification type in terms of risk tolerance. Individual portfolios include equivalent equities exposures via like models, but many may hold additional investments like structured notes, fixed income investments such as CDs, bonds, and other individually preferred securities. 1-Week risk score denotes overall performance of all AGG client portfolios grouped together by like-risk tolerance scores not by identical investment allocations; [4] [5] Macro Monday (tdainstitutional.com);

*All other Asset Guidance Group analysis, www.stockcharts.com; All index- and returns-data from Yahoo Finance; news from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat,0020Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet; Chart from Indeed’s Hiring Lab.

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