Chair Powell’s Comments Send S&P 500 to Record High

Powell says U.S. is on disinflationary path. Stocks and bonds responded to Chair Powell’s comments today, where he said the latest inflation data “suggest that we’re [the U.S.] getting back on a disinflation path…what we’d like to see is more data like what we’ve been seeing recently.” Equities rallied on the comments, with the S&P 500 closing at an all-time high of 5,504. RBC’s head of U.S. equity strategy Lori Calvasina is confident the bull market will continue, raising her year-end target for the index from 5,300 to 5,700. Tying out the risk-on day, UST yields fell 2-4 bps across the long end of the curve.

Job openings unexpectedly rise. May JOLTS Job Openings data released today exceeded expectations of a decline in vacancies, climbing to 8.14 million from last month’s downwardly revised 7.919 million print. In addition, the ratio of vacancies per unemployed worker, which is closely watched by the Fed, remained at 1.2, the lowest since June 2021. Speaking at a central bank panel in Portugal today, Chair Powell said that the labor market remains strong while cooling, and there has been a “substantial” move toward better labor market supply/demand dynamics.

Lagarde clarifies Euro-zone inflation targets. Commenting at a central bank panel in Portugal today, ECB President Lagarde said that services inflation doesn’t necessarily need to slow to 2% to convince policymakers to cut rates, since the overall inflation picture is a balance between goods and services. The remarks follow today’s May Euro-zone inflation data that showed unchanged and persistently elevated services inflation of 4.1% despite an overall decline in headline inflation from 2.6% to 2.5%. Core inflation remained at 2.9%.