Two the Point — Monetary Policy Risks and Market Outlook

This week’s market update covers recent developments with U.S. consumers and potential monetary policy shifts.

Key Insights:

· Retail Sales: May showed a weak 0.1% month-over-month increase with downward revisions, despite a 0.4% rise in average hourly earnings and 229,000 private payrolls added.

· GDP Estimates: The Atlanta Fed’s GDPNow model adjusted due to weaker consumer spending, contributing only 1.7 percentage points for Q2 with two months of data.

· Jobless Claims: Although claims rose through June 15, they are still below concerning levels, with a four-week average of 232,000; the threshold of concern is 250,000.

· Monetary Policy: There are potential risks of the Fed maintaining restrictive policies for too long, as labor market deterioration can rapidly accelerate once it starts. Fed speeches in the coming weeks will be crucial for signals of a rate cut.

· Global Central Banks: A pivot to rate cuts is noted globally, with the Bank of England hinting at a cut as soon as August 1. Pressure may mount on the Fed to follow suit as U.S. economic data remains mixed.