Markets in a Minute - Faulty Numbers
By: Zac Martin
Author: Zac Martin, Senior Investment Analyst
Week Ending May 15th – Faulty Numbers
Strong start to the week as Semiconductors continued carrying the market to new highs. However, after several higher-than-expected inflation reports, Treasuries spiked to their highest levels in over a year with the 30-year breaking 5%. This jump in Treasury yields acted as a strong headwind to stocks on Friday, with the S&P 500 declining -1.2%.
Inflation Update: Both the Consumer Price Index and the Producer Price Index reported above analyst expectations. On the consumer side, inflation ex. energy and food was 2.8% v. 2.6% last month. The predominant driver of the acceleration was shelter costs, increasing 3.3% year-over-year, which has now accelerated since its low in February. Now, there is a technical reason as to why shelter costs have risen significantly. While the Government was in shutdown near the end of 2025, the Bureau of Labor Statistics skipped the October housing panel and therefore recorded a zero for October’s CPI. Therefore, this functional zero has skewed the recent growth of shelter. However, the market has begun to price in a more hawkish Fed and potentially rate hikes. Currently the market is expecting 50% chance of a rate hike in January 2027, and no further rate cuts. This could be a potential headwind for stocks as borrowing costs increase and liquidity tightens. Forward Federal Funds Rate expectations from the CME FedWatchTool below.
The Week Ahead:
- NAHB Housing Market Index (5/18)
- FOMC Meeting Minutes (5/20)
- NVDA Earnings - After Market (5/20)
- Leading Economic Indicators (5/22)
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