Laserfiche WebLink
▪ <br />▪ <br />▪ <br />Energy prices and inflation remained the primary drivers of the macro backdrop as the U.S.-Israel-Iran conflict entered its third month, <br />disrupting global oil supply. Headline CPI accelerated at the fastest pace in more than three years, reflecting volatility in the energy <br />component. Crude oil, however, retraced roughly 20%from its DĂLJʹĞĂƌůLJJune peak as diplomatic progress between the United States and <br />Iran pointed to a potential framework for de-escalation. The labor market remained resilient, with continued payroll growth and subdued <br />jobless claims. Risk assets held firm,as equities hovered near record highs and credit spreads remained historically tight amid broadly <br />better-than-expected corporate earnings. Taken together, the current market environment has further constrained the case for near-term <br />monetary policy easing, leading the Chandler team to push out its expected timing for rate cuts beyond the six-month investment horizon. <br />The Federal ZĞƐĞƌǀĞ͛ƐJune FOMC meeting ended with policymakers unanimously holding the target range at ϯ͘ϱϬйʹϯ͘ϳϱй͕a notable shift <br />from the ϴʹϰsplit at Ɖƌŝů͛Ɛmeeting, which marked Jerome WŽǁĞůů͛Ɛfinal session as Chair. Under new Chair Kevin Warsh, sworn in on May <br />22,the Committee released an unusually concise statement that referenced Middle East tensions and energy supply disruptions while <br />removing prior forward guidance that had suggested a bias toward rate cuts. Updated projections leaned more hawkish, with 9 of 18 <br />officials expecting at least one rate hike this year and 6 anticipating multiple increases. The shift signals that restoring price stability has <br />reemerged as the central focus of monetary policy deliberations. <br />The Treasury yield curve flattened modestly in June as short-term yields responded to a more hawkish shift in Federal Reserve guidance. <br />The 2-year yield rose to 4.15% from 3.98% the prior month, while the 10-year yield edged down slightly to 4.44% from 4.45%.As a result, <br />the 2s/10s spread narrowed to 29 basis points, down from roughly 47 basis points a month earlier and significantly below the 69 basis <br />point spread at the start of the year. Meanwhile, the 3-month/10-year spread remained positive at 64 basis points. Front-end rates <br />ĂďƐŽƌďĞĚƚŚĞďƵůŬŽĨƚŚĞ&ĞĚ͛ƐƵƉĚĂƚĞĚƌĂƚĞŽƵƚůŽŽŬ͕ǁŚŝůĞůŽŶŐĞƌŵĂƚƵƌŝƚŝĞƐǁĞƌĞƉĂƌƚůLJĂŶĐŚŽƌĞĚďLJĂůĂƚĞͲŵŽŶƚŚĚĞĐůŝŶĞŝŶŽŝůƉƌŝĐĞƐ͘ <br />ECONOMIC UPDATE <br />3 <br />Page 173 of 373