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Equities rose to record highs last week as strong AI-related firm performance and reports of a peace deal in Iran increa...
06/01/2026

Equities rose to record highs last week as strong AI-related firm performance and reports of a peace deal in Iran increased investor optimism.

The reports of a peace deal also sent bond yields and oil price lower despite skirmishes between the United States and Iran throughout the week. AI optimism drove corporate profits higher during the first quarter 2026, as chip firms’ earnings continue to hit records.

Although markets have remained resilient, pockets of weakness in economic data have persisted. Nominal consumer spending increased 0.5% in April, but almost the entirety of the increase was due to prices; real consumer spending rose just 0.1%.

Nominal personal income was flat in April, but real disposable personal income fell 0.5%. The personal savings rate fell to 2.6%, the lowest since June 2022. Altogether, personal income and outlays show consumers are feeling the weight of higher inflation and adjusting their spending in response.

First quarter real GDP was revised down from an annualized 2.0% to 1.6%, driven lower by downward revisions to consumer spending on services and business investment in intellectual property products.

Consumer confidence edged down due to expectations of higher prices and lower incomes resulting from the war in Iran. @ Chmura Economics & Analytics

Oil prices declined 8.5% last week to $96.60 per barrel as optimism increased that a lasting peace deal with Iran is in ...
05/25/2026

Oil prices declined 8.5% last week to $96.60 per barrel as optimism increased that a lasting peace deal with Iran is in the works; however, oil prices remain more than 53% higher than thirteen weeks ago placing continued upward pressure on broader inflation measures.

Peace-deal optimism also sent stocks higher, with all three major indices up on the week. Treasury yields were mixed, with short- and intermediate-term yields continuing to rise while the long end of the curve declined modestly.

Despite declining this week, 10-year yields remain above 4.5%, and 30-year yields remain above 5.0%, two key psychological levels for markets.

Housing reports released last week showed mixed but steady activity. The NAHB Housing Market Index rose to 37 in May, exceeding expectations, while housing starts declining to a SAAR of 1.465 million units and building permits increased to a SAAR of 1.442 million, both above consensus expectations. Pending home sales rose 1.4% in April, slightly below expectations.

Manufacturing and labor market indicators were more uneven. The S&P Global manufacturing PMI increased to 55.3 in May, signaling continued expansion, while the services PMI edged down to 50.9 from 51.0, indicating softer but still positive service-sector momentum.

In contrast, the Philadelphia Fed index fell sharply to -0.4 in May from 26.7 in April, suggesting regional manufacturing conditions weakened significantly during the month. The leading index increased 0.1% in April, outperforming expectations of another decline.

The University of Michigan sentiment index for May fell to a new historic low of 44.8, underscoring growing household concern surrounding inflation, interest rates, and the broader economic outlook. Economics & Analytics

Stocks ended their rally on Friday as a selloff in bonds sent yields higher and equities lower. With oil prices back ove...
05/18/2026

Stocks ended their rally on Friday as a selloff in bonds sent yields higher and equities lower. With oil prices back over $100 per barrel, minimal progress on reopening the Strait of Hormuz, and hot inflation readings, investors increased bets that the Fed could hike rates by the end of the year.

The April PPI suggested energy inflation was already bleeding into core input prices. The headline PPI increased 1.4% month-over-month, and the PPI excluding food and energy rose 1.0%, driven by a 1.2% increase in the PPI for services.

The April CPI accelerated to 3.8% year-over-year, confirming that inflation remains well above the Federal Reserve’s 2% target. Increases in consumer prices were not limited to energy prices; both the CPI for apparel and the CPI for shelter rose 0.6% month-over-month.

Import and export prices also surged in April, with export prices rising 3.3% month-over-month and import prices increasing 1.9%, reflecting broad-based cost pressures across global trade channels.

Despite persistently high energy prices throughout April, industrial production increased 0.7% in April and capacity utilization rose to 76.1%, both above expectations. The Empire State manufacturing index surged to 19.6 in May, signaling continued strength in manufacturing activity despite rising input costs.

Consumer activity remained resilient despite rising prices; retail sales increased 0.5% in April, and retail sales excluding autos rose 0.7%, both exceeding expectations. Sales at gasoline stations rose 2.8% month-over-month and 20.9% year-over-year, as rising energy prices continue to put pressure on consumers. Economics & Analytics

Equities rose last week buoyed by strong earnings, solid economic data, and optimism that a lasting resolution to the wa...
05/11/2026

Equities rose last week buoyed by strong earnings, solid economic data, and optimism that a lasting resolution to the war in Iran is in the works.

The labor market showed resilience, with nonfarm payrolls rising 115,000 and the unemployment rate holding steady at 4.3%. The JOLTS report also left room for labor market optimism, with the hiring rate rebounding to 3.5% in March, the highest reading since May 2024.

Additional data released last week also pointed to underlying resilience. Factory orders rose 1.5% in March, well above expectations, and the ISM manufacturing PMI held steady in expansionary territory at 52.7.

Service-sector activity also remained expansionary; the ISM non-manufacturing index registering 53.6% in April, indicating continued growth in the largest segment of the U.S. economy.

Consumer sentiment and inflationary pressures, however, still present headwinds. The University of Michigan consumer sentiment index fell to a record low of 48.2 in May as price pressures continue to be a cause of concern for households.

One year forward inflation expectations remained elevated at 4.5%, suggesting consumers expect inflation to be sticky through 2026. Economics & Analytics

Oil prices continued to rise last week, increasing 8.0% to $101.94 per barrel and surpassing the $100 mark, reinforcing ...
05/04/2026

Oil prices continued to rise last week, increasing 8.0% to $101.94 per barrel and surpassing the $100 mark, reinforcing concerns that energy-driven inflation pressures may be reaccelerating.

Oil prices are now over 66% higher than thirteen weeks ago, suggesting that the earlier energy shock is not fully unwinding and may continue to weigh on consumers and production costs.

The advanced GDP report for the first quarter of 2026 was released last week; real GDP increased 2.0%, a notable acceleration from the 4Q 2025 reading of 0.5%. Growth was primarily driven by a sharp increase in private investment (+8.7%), which contributed 1.48 percentage points to overall growth, and personal consumption (+1.6%); however, personal consumption decelerated from its fourth quarter reading.

Net exports continued to be a drag on overall growth, subtracting 1.30 p.p. from the headline growth. Underlying inflation pressures are accelerating; the PCE price index rose 4.5% from a year ago with core PCE up 4.3%, both up 1.6 p.p from 4Q 2025. Economics & Analytics

Join with a group of economists from around the US exploring the economic effects of the recent conflict in Iran on oil ...
04/30/2026

Join with a group of economists from around the US exploring the economic effects of the recent conflict in Iran on oil prices and energy markets. How are states adapting to this volatility? What can businesses and consumers do to cope with rising costs? No cost - May 11th 10:30 Pacific. Register here: https://buff.ly/yXxNLcb

Oil prices rebounded sharply last week, rising 12.6% to $94.40 per barrel after two weeks of declines, as a clear path t...
04/27/2026

Oil prices rebounded sharply last week, rising 12.6% to $94.40 per barrel after two weeks of declines, as a clear path to a long-term peace deal with Iran and permanent opening of the Strait of Hormuz stray from reach.

While oil remains below its recent peak, the sharp reversal highlights that energy-driven price pressures may persist, prolonging the downstream effects on consumers and economic activity.

Treasury yields moved higher across most maturities, suggesting that markets are reassessing the extent to which recent easing in energy-driven inflation pressures will persist.

Stocks were mixed as the prior rally showed signs of slowing, with the DJIA declining and both the S&P 500 and NASDAQ rising; however, all three indices remain significantly higher than their levels four weeks ago.

Retail sales rose 1.7% in March, with sales excluding automobile sales increasing 1.9%, both well above expectations. However, much of this March surge can be attributed to increasing energy prices and inflation, with the data indicating that much of the increase comes from surging prices at gasoline stations rather than increased volume.

Business inventories rose a higher-than expected 0.4% in February. Preliminary measures of business activity increased in April, with the S&P Global manufacturing PMI rising to 54.0 and the services PMI at 51.3, both in remaining resilient through April’s energy price pressures.

Final consumer sentiment for April rose to 49.8 from its preliminary reading of 47.6, but it still declined from March’s final reading and remains historically low. Economics & Analytics

Markets rallied last week with equities surging and Treasury yields declining after Iran and the United States signaled ...
04/20/2026

Markets rallied last week with equities surging and Treasury yields declining after Iran and the United States signaled progress in peace talks. Although the Strait of Hormuz was reopened on Friday, as of Saturday morning, it was closed once again.

Oil prices declined an additional 12.5% to $84 per barrel, now 15.3% lower than four weeks ago; however, the price of oil remains 41.8% higher than thirteen weeks ago, so the downstream effects of the price shock remain to be fully released.

Economic data pointed to lower-than-expected inflation pressures but mixed underlying activity. Producer prices rose 0.5% in March, below expectations but still elevated, while core PPI increased only 0.1%, signaling easing input price pressures.

In contrast, import prices (+0.8%) and export prices (+1.6%) were up significantly in March, indicating continued pressure from global trade channels.

Business sentiment and housing activity showed signs of weakening, with the March NFIB small business optimism index falling to 95.8 and NAHB housing index declining to 34 in April.

Existing home sales totaled 3.98 million in March, coming in slightly below the consensus of 4.01 million.

Manufacturing data were mixed. Industrial production declined 0.5% and capacity utilization fell to 75.7% in March, both coming in below expectations during the first month of the war in Iran.

The full impact of energy price shocks can take months to materialize. Regional manufacturing data pointed to underlying strength, with the Empire State index rising to 11.0 in April and the Philadelphia Fed index increasing to 26.7, both well above expectations.

The labor market also remained stable, with initial claims falling to 207,000 and continuing claims declining to 1.818 million. Economics & Analytics

For your listening pleasure - the latest edition of After Office Hours with the Puget Sound Forecaster has been posted! ...
04/20/2026

For your listening pleasure - the latest edition of After Office Hours with the Puget Sound Forecaster has been posted! Episode 27 - Raspberries and Coachella. https://buff.ly/jWoXF40

Equities rose last week as Tuesday’s fragile ceasefire between the United States and Iran raised hope that the Strait of...
04/13/2026

Equities rose last week as Tuesday’s fragile ceasefire between the United States and Iran raised hope that the Strait of Hormuz would reopen and provide relief to global energy markets.

The 14% drop in the price of oil is promising, but at almost $96 per barrel, it remains over 67% higher than 13 weeks ago. The impact of the war in Iran is highlighted in March’s consumer price index (CPI).

The CPI for March surged 0.9% month-over-month and 3.3% year-over-year, almost entirely due to rising energy prices; the CPI for energy soared 10.9% month-over-month in March.

Although core prices (excluding food and energy) remained stable, rising only 0.2% month-over-month, energy prices are passed through to core prices over the course of months, so it is likely that high energy prices will continue to put pressure on consumer prices throughout 2026.

The threat of higher, energy-driven inflation adds uncertainty to the Fed’s rate-cutting path, which is further complicated by evidence of slowing growth.

The third revision to real GDP showed the economy growing at just a 0.5% seasonally adjusted annual rate (SAAR) in the fourth quarter of 2025. This is substantially lower than the first estimate of a 1.4% SAAR.

The pressures from slowing growth and rising inflation showed up in the University of Michigan consumer sentiment survey. The consumer sentiment index fell 5.7 points to 47.6 in April, the lowest level on record.

The same survey reported one-year-forward consumer inflation expectations rose one full percentage point to 4.8%. Economics & Analytics

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