LPL Market Signals: New Highs In Inflation and Stocks

Market Blog

Monday, June 21, 2021

New highs amid higher inflation

The S&P 500 Index finally broke out to new highs late two weeks ago on the heels of the hotter than expected inflation data. Equity Strategist Jeff Buchbinder and Chief Market Strategist Ryan Detrick discuss how the market took the 5.0% year-over-year jump in the May Consumer Price Index (CPI) in stride, as the majority of the jump came from the reopening. Higher prices on rental cars, used cars, and hotels amounted for much of the huge jump. Ryan also discusses that new highs aren’t anything to fear, as future returns can be quite strong.

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Fed preview and lower yields

Lawrence Gillum joins the podcast to discuss the surprising lower move in yields. Nearly everyone is expecting higher rates, but last week the opposite happened. Some disappointing jobs data, a smaller infrastructure deal, and a dovish European Central Bank (ECB) all were attributed for the move lower. Ryan notes that sometimes when everyone is on the same side of the boat, that can cause a surprise move in the opposite direction.

Ryan and Lawrence also discuss the big event this week: The Federal Reserve (Fed) meeting. Lawrence notes that it is expected they will leave rates at 0%, but the big question is when will they taper and have they even started to discuss it internally yet. It will likely be announced in Q3, with actual tapering starting early next year.

Sustainable investing in fixed income

Lawrence discusses why sustainable investing is becoming more mainstream in fixed income. We all talk about sustainable investing and usually think of equities, but Lawrence notes we are seeing explosive growth in fixed income as well. In fact, over $400 billion of environmental, social, and governance (ESG) related debt was issued in the first quarter of 2021. Lawrence explains that the future is indeed bright for this area of investing and we don’t see it slowing down anytime soon.

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Tune in now

Listen to the entire podcast to get the LPL strategists’ views and insights on current market trends in the US and global economies. To listen to previous podcasts go to Market Signals podcast. You can subscribe to Market Signals on iTunes, Google Podcasts, or Spotify and find us on the LPL Research YouTube channel. Or you can watch it below.

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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.

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All index and market data from FactSet and MarketWatch.

This Research material was prepared by LPL Financial, LLC.

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