Author: Zac Martin, Investment Associate
Week Ending May 16th – Downgraded
Moody’s downgrades US Government debt to Aa1 from Aaa. Moody’s highlighted that the downgrade was in response to more than a decade of debt and interest ratios that are significantly higher than similarly rated sovereigns. Additionally, Moody’s projects that at the current pace US interest payments would be likely to absorb 30% of revenues by 2035, up from 18% in 2024 and 9% in 2021.
Consumer Price Index for April decelerated to 2.3% year over year, which was below the analyst consensus. Energy remains the largest detractor as oil prices remain at a three-year low. Additionally, most other sections decelerated with the expectation being food costs.
Producer Price Index for April decelerated by 1%, to 2.4% year over year. This deceleration was also primarily due to lower energy prices.
Retail Sales decelerated to 0.1% from 1.7% month over month, however, this is 4.7% higher than the same period a year ago. Primarily from an increase in spending for motor vehicles and parts dealers, this subindex increase is consistent with a "tariff pull through" that several other reports are suggesting.
Michigan Sentiment continued its decline in the May preliminary report. Tariffs were mentioned to be a concern for nearly three-quarters of respondents, however, many surveys near the end of the reported period showed signs of sentiment improvement following the China tariff pauses but not enough to move the needle just yet.
The Week Ahead:
- Leading Economic Indicators Index
- Kansas City Fed Manufacturing Index
- Chicago Fed National Activity Index
HORAN Capital Advisors, LLC is an SEC registered investment advisor. The information herein has been obtained from sources believed to be reliable but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results. Market conditions can vary widely over time and there is always the potential of losing money when investing in securities. HCA and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.