Weekly Market Commentary June 9th to June 13th 2025
This past week we received another round of cooler-than-expected inflation data. The Consumer Price Index (CPI) showed costs rose 0.08% in May and 2.4% over the last 12 months. When excluding volatile items such as food and energy, the numbers were 0.1% and 2.8%, respectively. The presumed inflationary impact of tariffs has yet to come to fruition in the final figures, even as the report shows firms passing down costs to consumers. This is mainly due to deflation in recreational-services items, and in durable goods such as cars, which have more than offset passed-down tariff costs.
The Producer Price Index (PPI) showed similar results, indicating a muted 0.1% increase in producer prices in May, and a 2.6% increase from last year. Although some components of the report showed possible tariff-related price increases, there were no signs of significant price shocks from tariffs.
The bottom line with inflation is it may still be too early to know how much tariffs will impact consumer prices. After two months, the results are tame, but large-scale impacts like these generally have a lag effect and may take at least six months before a conclusion can be made. There are signs of some pricing pressures which are being passed through to the consumer, however consumers appear to be in a state of caution and being more reserved in their spending, helping to offset these pressures.
The equity markets gave back its weekly gain on Friday following the Israel strike against Iran on Thursday night. At a time of heightened geopolitical tension, this attack adds further concern and a new layer of uncertainty. This sent stocks lower and energy prices higher, a reaction that could have an immediate impact on inflation. On the week, the S&P 500 fell 0.4% to 5,977, the Nasdaq fell 0.6% to 19,407, and the Dow Jones Industrial Average fell 1.3% to 42,198.
For this upcoming week, the markets will be focusing on the FOMC’s interest rate decision on the 18th. The overwhelming expectation is for rates to remain unchanged, but Fed Chair Powell’s proceeding press conference should give more insight to the Fed’s outlook for 2025. We will also get further information on consumer spending through Retail Sales, as well as housing data through Housing Starts and Building Permits.
