Producer and consumer prices moved higher in March, but both remain manageable. Inflation has been a major topic for financial markets in 2018, with concerns initially sparked by a January wage growth number that exceeded expectations. Wage growth cooled somewhat in February and March, though it currently stands at 2.7% year over year, which remains toward the top of its post-financial crisis range. While faster wage growth is a good thing for workers, wages are one of the largest expenses for employers; and a strong move higher could lead companies to pass higher wage expenses on to consumers, potentially fueling inflation and causing the Fe

Spreads across various sectors of fixed income are signaling that areas of recent stress are receding, a positive omen for bonds and stocks alike. Spreads can be generally defined as the difference between the yield of a security or index relative to another, lower-risk, comparable maturity security or index, and can be an indicator of market concern or optimism. For instance, if investors are enthused about economic conditions and believe default rates will be low moving forward, they will demand less of a premium (relative to very low risk assets like U.S. Treasuries) in order to take on the risk of lower-rated and higher-risk segments of f

Increasing trade tensions weighed on markets during the first week of April, and a weak March jobs report added to concerns, but in this market a little perspective can go a long way. The S&P 500 Index fell on April 6, but the drop may have seemed worse for investors because January 2017 – January 2018 was one of the least volatile periods for the index in history. The S&P 500’s 2.2% drop ranked as the fifth largest single-day decline year to date. However, compared to 2017, which saw a maximum daily decline of 1.8% in May, and only experienced four days the entire year where stocks dropped more than 1.0%, the move seemed

First quarter earnings season, which kicks off April 12–13, sets up to show solid growth, buoyed by tax reform. The S&P 500 Index has grown earnings at a double-digit clip in three out of the past four quarters, a trend that is poised to continue for the first quarter. The index could also extend its streak of 35-straight quarters of exceeding earnings expectations. In this week’s commentary, we preview what we expect may be a very strong earnings season and highlight some key dynamics we will be watching.

Another Strong Earnings Season on Tap

We expect a year-over-year increase in earnings for the S&P 500