To my clients:
It was an up week for North American stock markets with the Canadian TSX finishing up 0.4%; the U.S. Dow Jones Index up 0.6%; and the U.S. S&P 500 up 0.6%.
Very short update this week:
- The Fed’s preferred measure of inflation, the PCE Price index, was released this morning and came in better than expectations. The headline year-over-year rate now sits at just 2.2% (very close to the Fed’s 2.0% target). Admittedly, the core rate (excluding food and energy prices) came in at a higher 2.7%, but is generally trending in the right direction also.
- Meanwhile, weekly jobless claims came in better than expected suggesting that the employment situation, while slower than early 2024, is still holding up quite well.
- Interestingly, the market implied probability of a second consecutive 0.50% rate cut in November now sits slightly better than even odds at 54%. As I’ve recently been noting in these missives, don’t underestimate the power of a Fed rate cut cycle. Even if economic slowing accelerates, and perhaps results in a mild recession, the Fed’s flexibility to initiate both large and rapid rate cuts will be supportive of the economy and markets. To my eye, the maxim “Don’t Fight the Fed” seems more relevant than ever.
That’s it for this week. All the best,
Nick
Nick Scholte, CIM, FCSI
Senior Portfolio Manager
Scholte Wealth Management
RBC Dominion Securities Inc. │ Tel: 604.257.7569 │ Fax: 604.235.9950
3200-1055 West Georgia │ Vancouver, BC │ V6E 3P3
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