Weekly Commentary: July 12, 2021
The Week in Review: July 4 - 10
Markets to Fed: Eh, who cares?
The Federal Reserve released minutes from its June meeting last Wednesday. The market’s reaction? Pretty much non-existent. The meeting summary revealed that Fed members don’t believe the economic recovery has met their goal of “substantial further progress” and suggested that they’re content to stay where they’re at for now.
The major driver last week appeared to be the steep decline in U.S. Treasury yields, with the yield on the benchmark 10-year U.S. Treasury note hitting a nearly five-month low on Thursday. It climbed back some toward the end of the week, but it’s still significantly under 2%. That’s not entirely bad news for investors, as falling bond yields tend to improve the appeal of equities. Still, markets stayed mostly flat for the week, with not much news to push them higher.
One bright spot: Jobless claims are staying near pandemic lows, with initial unemployment claims coming at 373,000 last week. Still, that’s about 25,000 higher than what economists had forecast. And speaking of jobs, Microsoft released an interesting study on the future of work last week. They found that more than 40% of employees are considering leaving their employer and switching jobs this year. What’s causing this “Great Resignation,” as the media is calling it? The top motivator was the desire for flexible work. It’s an interesting trend to watch, especially in regard to how it impacts retirement saving and planning for American workers.
Traffic Jam
The infrastructure bill and the budget both seem to be idling in the Senate. Last week, Senate Majority Leader Chuck Schumer said it may be August before we see either bill come out of that chamber, while House Speaker Nancy Pelosi said that group won’t be doing anything until the Senate passes them through. The Senate better work fast, though, because they’re scheduled for a monthlong break from Aug. 9 to Sept. 10.
Where No Billionaire Has Gone Before
Richard Branson traveled to the edge of space over the weekend as a passenger on the Virgin Galactic VSS Unity spacecraft. He’s the first of the billionaire space company creators to blast off, narrowly beating out Jeff Bezos, who is scheduled to travel next week. The flight comes nearly two decades after Branson started his space tourism firm back in 2004.
Coming this week
How are consumers feeling? We’ll get a pretty good idea on Tuesday when the consumer price index is scheduled to be released. Producer price index numbers will come out on Wednesday, followed by retail sales and the consumer sentiment index on Friday.
Initial weekly jobless claims are forecast to drop to 364,000 this week. In Arizona, the $300 in additional supplemental benefits is coming to an end, while a battle over benefits is dragging on in Maryland.
Monthly child tax credit payments will start on Thursday for qualifying families. The payments will be $250 or $300 per child, depending on age, for families that qualify for the full amount. Right now, the payments are scheduled to last through December 2021, but some lawmakers are already pushing to extend the program or even make it permanent.
Have a fantastic day!
Tom Siomades, CFA®
Chief Investment Officer
AE Wealth Management
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