Major stock indices all ended the week with substantial gains following an Iran/Israel ceasefire.  Emerging markets had the biggest gains.  Also, propelling markets was the signing of a US-China trade truce which should enable the delivery to the U.S. of rare earth minerals and magnets.  The administration cited there were trade agreements with “four or five different countries.” 

While new unemployment claims fell, recurring claims have risen to the highest level since November 2021.  New single family home sales fell dramatically in May.  First quarter GPD was revised down to 0.5% decline.  Bucking the downward trend was a sharp uptick in durable goods orders but that was mostly due to aircraft.  Two FED officials commented that a rate cut could happen in July which also boosted the markets.

Treasury bond yields fell with the 30-year bond yield at 4.828% and the 10-Year note at 4.281%.  Freddie Mac reported that the average 30-year mortgage rate fell to 6.77%.  Crude oil fell sharply to $65.12 a barrel and natural gas fell to $3.753 per MMBTUs.  The U.S. dollar index fell to 97.34 and gold fell to $3284.40 an ounce.

In economic reports this week:

• The National Association of Realtors reported that existing home sales rose a seasonally adjusted 0.8% in the month of May but were down 0.7% from May 2024.
• The S&P CoreLogic Case-Shiller Home Price Index rose 0.61% in April and were up 2.72% from a year ago.
• The Commerce Department reported:
  • Sales of new single-family homes fell a seasonally adjusted 13.7% in May from April and were down 6.3% from last May.
  • The median price of a single-family home sale was $426,000.  This was 3.6% above April’s price and is 3.0% above last May’s price.
  • Based on the current sales rate, there is a 9.8-month inventory of new homes.
  • The weak new home sales are attributed to affordability issues with mortgage rates near 7%.

• Durable goods orders rose 16.4% in May following a 6.6% decline in April.
  • Excluding transportation, durable goods orders increased 0.5% in May.
  • Excluding defense, orders increased 15.5%.

• • 1^st quarter gross domestic product was revised down to a 0.5% decline.
    • The decline was attributed to higher imports and lower government spending which were partly offset by an increase in investment and consumer spending.

• • Personal consumption expenditures fell a seasonally adjusted 0.1% in May.
    • Motor vehicles and parts sales fell 49.3%.
    • Energy sales fell 19.8%
    • Housing and utilities rose 13.7%.
    • Healthcare expenditures rose 11.3 percent.
  • The PCE price index rose 0.1.  Excluding volatile food and energy, prices rose 0.2%.  This is the FED’s preferred measure of inflation.
    • From a year ago PCE prices rose 2.3% but excluding food and energy rose 2.7%.
    • Adjusted for inflation personal expenditures fell 0.1%.
    • Incomes fell 0.4% or 0.6% after inflation.
    • The personal savings rate was 4.5%.
• The Labor Department reported:
  • Seasonally adjusted first-time claims for unemployment were 236,000, down 10,000 from the previous week’s revised level.
    • The 4-week moving average of claims, designed to smooth out volatility, were 245,000, a decrease of 750 from the previous week’s revised level.
    • Recurring claims rose to 1.97MM, the highest since November 2021.
    • For the full unemployment report go here:  https://www.dol.gov/ui/data.pdf
• The EIA weekly oil report is here: Weekly Petroleum Status Report.  Also, the EIA reported in the prior week:
  • Field production of crude oil rose from 13.431MM BPD to 13.435MM BPD.
  • Natural gas storage rose 96BN cubic feet and was above its average level during the past five years at this time of year.
• Baker Hughes reported the number of oil rigs fell 6 to 432 and the number of natural gas rigs fell 2 to 109.

Please call us if you have any questions.

Loren Rex – Emeritus

Erik A Smith, AIF® – President & C.E.O.

Nicholas Acri, CFP® – Partner & Wealth Advisor

Dylan Thomas, CFP® – Partner & Wealth Advisor

These are the opinions of Loren Rex and Erik Smith and are not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average, Dow Jones, or simply the Dow, is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity indexes. The Nasdaq Composite is a stock market index that includes almost all stocks listed on the Nasdaq stock exchange (more than 2500 stocks).

Sources:

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

https://ir.eia.gov/ngs/ngs.html

https://www.freddiemac.com/pmms

https://www.wsj.com/market-data?mod=nav_top_subsection

https://bakerhughesrigcount.gcs-web.com/na-rig-count

https://www.census.gov/economic-indicators

https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales

https://www.spglobal.com/spdji/en/index-family/indicators/sp-corelogic-case-shiller/sp-corelogic-case-shiller-composite/#overview