Stocks Grind Higher as Bonds Await the Fed

David O'Malley

By David O'Malley | June 11, 2018

This week is set up to have a significant number of market moving events for stocks and bonds. Just as U.S. equities hit their highest levels since early this year, a few key events on the world stage and for fixed income markets are on the horizon.

The historic and unpredictable summit between the U.S. and North Korea is a wildcard for the week coming off the tumultuous G-7 meeting, where trade talks intensified between the U.S. and its allies. As a result, the markets will need to navigate uncertainty on the global stage.

U.S. interest rates have to deal with a one-two-three punch of a rising amount of supply at this week’s Treasury auction, fresh inflation data and the Fed’s June meeting, where an interest rate increase is expected. The U.S. Treasury is scheduled to auction off $193 billion in securities on Monday and Tuesday, which is up $4 billion and projected to rise more as deficits increase. The CPI will also be released on Tuesday and is expected to rise at the fastest pace since 2012.

I continue to remain positive on equities, despite numerous factors that could impact prices, due to solid economic growth. However, I remain very cautious on U.S. interest rates as both technicals and fundamentals support higher rates in the months ahead.



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This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

Any statements about financial and company performance of The Penn Mutual Life Insurance Company or its insurance subsidiaries (each, “Client”) made by the author is provided with a written consent from the Client.  Penn Mutual Asset Management is a wholly owned subsidiary of The Penn Mutual Life Insurance Company.

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