By Horizon Investments

BIG NUMBER

3.6% – U.S. Unemployment Rate for May

(Click the chart below to view and download)

WHAT IT IS

The May unemployment rate. While the jobs number came in light at 75,000, the unemployment rate remained near a 50-year low, indicating continued economic strength.

MARKET/POLICY NOTES

Indications from the U.S. Federal Reserve (Fed) that it may cut interest rates soon led to a surge in U.S. stock markets last week.  Positive signs on the trade discussions with Mexico, confirmed over the weekend by President Trump, also contributed to the equity rally. “Constructive” talks in Japan between U.S. and Chinese officials around trade are also supportive at the margin.

HOW MARKETS REACTED

U.S. equities had their best week since November 2019, ending up 4.5%, and outpaced both international developed markets, up 3.4%, and emerging markets, up 1.2%. The Fed policy sensitive 2-year yield fell to its lowest level since December 2017.

WHAT THIS MEANS

Against a backdrop of continuing strong U.S. employment trends, Fed rate cuts could prolong the expansion we have seen in the U.S. economy.  A removal or relaxation of trade tensions in the coming months are another potential catalyst to increased economic growth.

WHAT TO WATCH

In terms of data this week, Consumer Price Inflation and Retail Sales are the highlights.  Antitrust activity is picking up in Washington, with Google and Facebook in crosshairs, along with Amazon and Apple.

Horizon Investments is a participant in the ETF Strategist Channel.

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