Stock and GDP Outlook, for Week Ending 06/20/2025
Optmistic about Stagnation
Stock prices and the mean expected NGDP growth rate fell last week, as oil prices spiked in response to Israeli airstrikes against Iran. Iran has been retaliating with drone and missile attacks in Israel over the weekend. Despite this and higher oil futures prices in Sunday night trading, S&P 500 futures prices are nonetheless a bit higher as I write this at about 9:30 PM.
Also, inflation expectations fell slighltly, as did core CPI inflation in May, though the YoY trend over the last few months for the latter can best be described as flat.
The good news is that US credit default swap prices continued their steady decline since mid-May.
Overall, the economy continued to show signs of stabilization, but with increased prospects for supply shocks via the escalated Israel-Iran aggression, in the context of a negative supply shock-prone US administration. With inflation expectations still near the Fed’s target, there is very little justification for optimism in the short-to-medium term, but very little is still better than none.
PS: The market-based NGDP growth and output gap forecasts were updated for paid subscribers.
Note: This post, as is the case with all my posts, should not be construed as offering investment advice. Such advice should be tailored to the individual investor by qualified professionals who, ideally, are fiduciaries.
Links to Data:
Economic Data Sources:
https://fred.stlouisfed.org/series/SP500
https://www.wsj.com/market-data/stocks/peyields
https://www.barchart.com/futures/quotes/ES*0/futures-prices
https://ycharts.com/indicators/sp_500_earnings_per_share_forward_estimate#:~:text=Basic%20Info-,S&P%20500%20Earnings%20Per%20Share%20Forward%20Estimate%20is%20at%20a,28.27%25%20from%20one%20year%20ago.
https://www.cnbc.com/quotes/.VIX
https://fred.stlouisfed.org/series/DTWEXBGS
https://fred.stlouisfed.org/graph/?g=Ee9i
https://fred.stlouisfed.org/series/T10Y3M#0
https://fred.stlouisfed.org/series/DGS10
https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
https://tradingeconomics.com/commodity/crb?user=nunote
https://www.cnbc.com/quotes/@CL.1
https://www.cmegroup.com/trading/en
https://www.spglobal.com/spdji/en/documents/additional-material/sp-500-eps-est.xlsx
https://www.cmegroup.com/markets/interest-rates/stirs/30-day-federal-fund.quotes.html