Stock And Bonds Higher; Debt Ceiling Concerns Alleviated and Strong Jobs Reports

The Dow (+2.2%), NASDAQ (+2.1%), and S&P 500 (+1.9%) all moved swiftly positive for the week, while taxable and tax-free municipal bonds followed suit, gaining about 1% and 0.7%, respectively.  The 10-year Treasury yield fell 0.12% to close the week at 3.69%, helping to propel the bond market.

Both the stock and bond markets reacted favorably to two catalysts last week.  Late in the week, Congress approved the deal that would eliminate the debt ceiling concerns, which took that risk off the table.  Then, a series of jobs reports came in last week that exceeded investors’ expectations.  The latter demonstrates that the labor market continues to remain strong.  That is great for the economy, but provides fuel for the Fed to continue raising rates.

This is a relatively slow week for reporting economic data.  However, next week will be a big one, as Leading Economic Indicators (LEIs) and the Consumer Price Index (CPI – a leading measure of inflation) will be reported early in the week.  These will be important data for the June Fed meeting on Wednesday.  The question is whether or not the Fed will raise interest rates again next week.

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^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}