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June 2024 Monthly Commentary

May 2024 Monthly Commentary

Piton June Market Review

June rounded out an excellent quarter for risk assets as momentum continued to fuel the equity markets. Bond markets also rebounded as short-intermediate rates fell, steepening the curve slightly. Last month, we saw strong jobs reports, tame inflation figures, and a Federal Reserve keenly aware of the risks of cutting rates too soon and keeping rates restrictive for too long. Despite the U.S. central bank still weighing the risks, the European Central Bank cut rates at the beginning of June in what was described as a “hawkish” cut. Also, as many suspected, the U.S. presidential race began to filter into markets as the first debate spurred many questions.

The U.S. equity market continued its march higher, notching an excellent total return for the quarter and month. NVIDIA Corp (NVDA) continued to be a focal point of the market, rising over 12% in June alone. Despite this, the stock did see a 12% retracement from its high point during the month. Many investors believe equities will begin to see a broadening of winners, as A.I. adjacent companies begin to utilize new technologies in A.I. Others believe valuations are generally stretched into an economy that is showing some signs of exhaustion. All broad markets were positive in June, with the S&P rising 3.59%, led by the Nasdaq, up +6.03%. The Dow Jones Industrial Average finished up 1.23%. The technology sector continued to lead, rising 9.32%, followed by consumer discretionary stocks, up 4.89%. Consumer staples, financials, industrials, energy, materials, and utilities all had a negative total return for the month.

Bond yields started the month with a sharp price rally as manufacturing and price data came in weak. Within a few days, those prices retraced as non-farm payroll data came in surprisingly strong for May. Rates dropped over the month from 4.50% (U.S. ten-year rate) to a low of 4.22% on June 18th, ending the month at 4.45%. Shorter duration bonds had slightly more price appreciation as investors still consider a rate cut or two as a “base case” for the Federal Open Market Committee (FOMC) policy in the second half of 2024. Despite the back and forth of yields over the month, the U.S. Treasury saw solid demand for auctions on newly minted bonds.

Credit sectors, while positive, did not outperform the treasury market last month. Supply in the corporate bond market has been robust, with June seeing approximately $100 billion in new issuance. The primary corporate bond market has posted the most sales since the surge from the Covid era. Securitized sectors, including U.S. mortgage-backed securities (MBS), again posted better total returns than the treasury market. The municipal bond market posted its best relative performance month in many months, as reinvestment in tax-exempt equivalents made good sense.

Data Recap

Summer began with some slowing data points. Despite the strong payroll figures, weekly data suggested unemployment is on the uptrend. Consumer confidence surveys also showed some signs of weakness. Inflation data seemed more important as a market driver and for Federal Reserve officials’ comments, but softening trends were present in June.

  • Weekly jobless claims data rose to over 240k last month, levels not seen since August 2023. Continuing claims also moved slightly higher.

  • Consumer confidence showed some weakness. The University of Michigan consumer sentiment survey fell to 68.2, a figure that reached 79.4 in March.

  • Manufacturing is slower as reported by most regional reports.

  • Retail sales (ex-autos) came in below expectations of 0.1% (vs. 0.3% expectations). The prior month was also revised lower.

  • Housing continued to show weakness. Housing starts were down 5.5%, and building permits fell 3.8% over the month. Existing home sales fell 0.7%, and new home sales dropped 11.3%

Inflation data was most helpful to equity and rate markets. The benign readings continue to give investors hope that restrictive policy will ease before the end of the year.

  • Prices paid indices on both manufacturing and services fell slightly last month.

  • The CPI, released the morning of last month’s FOMC meeting, came in lower than expectations. PPI (ex-food and energy) also dropped to 2.3% year over year.

  • Core PPI data was slightly higher than expectations for the month. CPI data was right at forecasters’ estimates.

  • Core PCE data was stable for both the monthly and year-over-year periods.

Despite summer trading, markets continue to see volatility, especially in the rates market. The FOMC met on June 12th and the message continued to include that the odds of a rate cut have come down somewhat. Fed officials dot plots still favor a rate cut later in the year, but Chairman Powell made the point to explain that their committee is walking on a tightrope. Cutting rates too early and reaccelerating inflation, versus leaving rates too high for too long and causing an economic slowdown.

We would expect additional market volatility, as the presidential election was thrust into the mix late last month. The seemingly one-sided debate has investors cautious about whether President Biden will continue to run for re-election, while former President Trump gained ground after the debate.


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