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Dear clients and friends,

At Perseus Wealth it is important to us that you are well informed about what is happening in the markets. Here are a few of the key topics of conversation that deserve the most attention this month.   If you have any questions or would like additional detail, we would love to participate in further discussions.

What’s Happening: 

As has been the case for most of the year, inflation is the headliner, ticking up once again in June, with the Consumer Price Index increasing to 9.1% from the prior year, up from May’s 8.6%[1]. Price increases were broad across the economy, though surging energy prices accounted for almost half of the overall increase. Pain at the pump: June’s gasoline average YOY prices were up 59.9% and overall energy up 41.6%. Core inflation, however, which excludes food and energy, slowed for the third straight month, rising “only” 5.9% over the year, down from 6.0% in May and 6.5% in March.

Accelerating inflation continues to put pressure on the Fed, prompting more aggressive rate increases than was anticipated just a few months ago and pushing up the market’s expectations of the Fed’s next decision. Following June’s inflation report on July 13th, the expectations for the outcome of the next meeting jumped sharply to an 80% probability of a 100 basis point hike[2]. However, especially over the last few months, these expectations can shift abruptly, as only a few short weeks ago - on July 5th - that same probability was zero.

While the consumer may have taken a breather in May, they came back in June with retail sales climbing 1.0%[3]. While spending at gas stations was driven by surging gas prices, increases in online shopping and furniture sales both exceeded their dips in May. Falling gas prices thus far in July will likely lower the headline data next month. It is also likely to boost consumer sentiment which has already improved from the preliminary July survey[4]. Feelings about the current economic situation had their biggest jump since April last year and, looking ahead, consumers’ long-term inflation expectations fell to a one-year low of 2.8%.

Continued fears about the state of the economy resulted in increasing recession concerns. The second quarter’s GDP report, coming July 28th, will be critical in either calming or fanning these fears as an indication of how resilient (or not) the economy has been over the quarter. It is interesting to note, however, that, if the US is deemed to have been in a recession over the last six months (based on two successive quarters of negative GDP growth), it will be the first recession that hasn’t had multiple months of job losses since nonfarm payrolls data began in 1939. The most recent month of job losses was December 2020. The NBER will make the official “recession call” at a point in the future.

The Bottom Line:

The Fed and inflation continue to rule the day. The market’s focus will likely be on the end of July (next week) with both the Fed’s rate decision as well as the report second-quarter GDP report coming out on back-to-back days – the 27th and 28th. Concern over the state of the economy has been simmering and these two events may well shape the narrative for the second half of the year.

Best always,

Sean and John

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that any strategy will be successful.

[1] Bureau of Labor Statistics,

[2] CME FedWatch Tool,

[3] Census Bureau

[4] University of Michigan

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