This material includes forward-looking statements subject to risks and uncertainties; actual results may differ.
Inflation Hits Highest Level Since 2023
The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred measure of inflation, rose 3.4% year-over-year excluding food and energy, its highest level since October 2023, while headline PCE inflation reached 4.1%. The increase was largely driven by higher energy costs and broader price pressures. The stronger inflation data reinforces the Fed's recent hawkish stance, with markets continuing to expect a potential rate hike in September despite slightly lower odds following the report. Even with higher prices, consumer spending and personal income both increased 0.7%, suggesting households continue to spend despite inflationary pressures. Meanwhile, the U.S. economy remains resilient, with first-quarter GDP revised up to 2.1% and weekly jobless claims falling, indicating continued economic strength.
Hormuz Shipping Recovers, But Risks Persist
Shipping traffic through the Strait of Hormuz has rebounded following the U.S.-Iran ceasefire, with vessel crossings reaching their highest levels since the conflict began, though volumes remain well below normal. Confidence was shaken after a cargo ship was struck near Oman, highlighting ongoing security risks and leaving shipowners uncertain as Iran and the U.S. support competing shipping corridors. Elevated insurance costs, concerns over mines, and the lack of clear navigation rules continue to limit a full recovery in commercial traffic. While crude oil exports from Kuwait and the UAE are increasing, many shipping companies remain cautious until safer and more predictable transit conditions are established.
Consumer Confidence Rebounds in June
Consumer sentiment improved in June as easing gasoline prices and reduced concerns over the Iran conflict lifted confidence, though overall sentiment remains below pre-conflict levels. Long-term inflation expectations declined from 3.9% to 3.3%, a positive sign that consumers believe inflation pressures may moderate over time. Despite elevated inflation, consumer spending has remained resilient, supported by higher-income households and continued retail spending. However, high living costs continue to weigh on many families, with more than half of consumers citing inflation as a strain on their personal finances.
As always, Base Wealth Management remains focused on aligning investment strategies with your long-term goals amid evolving market conditions.
