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Key Investing Resource: Strategist Larry uses Interactive Brokers as his core brokerage. Feel free to check out IB. I currently park excess cash at Interactive Brokers. Check it out. It’s a great brokerage.
In our emails, we will provide the following coverage points:
Core CPI rose 0.2% in May, marking a second consecutive month of cooling inflation and bringing the year-over-year increase to 3.4%, the slowest pace in over three years.
This unexpected decline may signal the start of a downward trend in inflation, though Federal Reserve officials will need several months of consistent data before considering interest rate cuts.
Despite the positive news, core CPI's three-month annualized rate still stands at 3.3%, indicating that inflationary pressures, especially in shelter prices, remain significant.
Federal Reserve officials are planning just one interest rate cut this year, down from three previously forecasted, maintaining the federal funds rate at 5.25% to 5.5%, a two-decade high.
Policymakers expect four cuts in 2025.
Chair Jerome Powell emphasized the need for more favorable inflation data before reducing rates, despite recent progress. The Fed adjusted its language to acknowledge modest inflation progress and raised its inflation forecast to 2.8%.
Although the labor market remains strong, officials debated the effectiveness of higher borrowing costs, with some suggesting the neutral rate may have risen post-pandemic.
Chart That Caught Our Eye
Analyst Team Note:
Leveraged loan issuers are taking advantage of a repricing wave to save over $1.4 billion in annual interest expenses amid the Federal Reserve's "higher for longer" interest rate stance.
Companies, particularly those with sub-investment-grade ratings, are reworking their debt terms to cut margins by about 50 basis points on average, as investors seek opportunities in a market with limited new issuance.
Sentiment Check
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