Stocks closed lower on Friday, sending the S&P 500 down the most in three weeks after sharp declines in global bond yields triggered renewed concerns over sustained world growth. Friday's declines more than erased an earlier weekly gain that brought the benchmark index to within 12 points of its 2,130 all-time high reached just over a year ago. The German 10-year bund yield fell to a fresh all-time low of 0.01%, down sharply from Monday's levels of 0.07%; while the Japanese 10-year government debt yield dropped to a record low of minus 0.13%. Wall Street essentially succumbed to caution ahead of key upcoming events, including central bank policy meetings by the U.S. Federal Reserve and Bank of Japan this week, the U.K. Brexit vote on June 23 and in mid- and late July, the two political party conventions.
For the week, the S&P 500 declined -0.11%, the Dow Jones Industrial Average rose +0.33% and MSCI EAFE (developed international) fell -1.73%.
What We’re Reading
Record Low Yields on Safer-Haven Buying Spree -- Fox Business
What Fed Chair Yellen is Watching -- CBS News
Brexit: The Vote of a Lifetime -- CNN.com
Chart of the Week: Keeping an Eye on Inflation; CPI Data Due Out Thursday
The key upcoming economic reports this week will be the May retail sales data on Tuesday and the consumer price index (CPI) on Thursday. JPMorgan expects retail sales to take a breather following the large increase in April. They predict a seasonally adjusted 0.4% total retail sales growth and 0.2% core retail sales growth. If realized, absent revisions, these results would be consistent with our forecast of a 3.6% seasonally adjusted annual rate spending growth this quarter. JPMorgan's outlook, along with the economists' consensus forecast, projects the May CPI will increase by 0.3% over the month on higher oil prices and the core CPI will increase 0.18% or 2.2% year-over-year average (up from 2.1% in April and 1.7% in May 2015). Core consumer prices exclude volatile elements, including food and energy prices.
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