This just in: CEO Chris Shuba in Financial Planning

Read the highlights of this week’s commentary from Helios:

  • As expected, the Federal Reserve held interest rates steady during its May FOMC meeting, reflecting concerns over persistent inflation. However, the Fed unveiled an easing policy by announcing a slowdown in the pace at which it reduces its balance sheet.
  • Fed Chair Jerome Powell’s post-meeting conference reinforced a dovish sentiment, suggesting a potential for rate cuts amid favorable supply-side factors. Despite initial market expectations, Powell refrained from adopting a hawkish stance, emphasizing the Fed’s anticipation for inflation to decline due to favorable supply-side factors. Overall, the Fed’s stance leaned towards cautious optimism, balancing concerns over inflation with measures aimed at maintaining economic stability.
  • In April, nonfarm payrolls fell short of expectations, with an increase of 175K versus an anticipated 240K. The unexpected slowdown in job creation was underscored by a rise in the unemployment rate, which ticked up from 3.8% to 3.9%. This rise in unemployment, coupled with weaker-than-expected business activity in the service sector, suggests a potential cooling in the labor market.
  • Both the ISM Manufacturing Index and the ISM Services Index slipped into contractionary territory in April, signaling a slowdown in economic activity. (A reading below 50 in these indices indicates contraction in the respective sectors.) The ISM Manufacturing Index fell to 49.2, down from 50.3 in the previous report, marking the first contraction since January 2022. Similarly, the ISM Services Index declined to 49.4 from 51.4, reflecting the first contraction since December 2022.

Want to learn more about Helios Quantitative Research? Click Here to schedule a meeting with one of our representatives!