Subject: Control Panel: Warm spring weather
For charts and active links go to https://discussion.fool.com/t/...
The weather is warming as the spring advances.
The economic weather is also warming, on the employment as well as inflation fronts. Since employment and inflation are the Federal Reserve’s dual mandates, this turns up the heat on brand-new Fed Chair Kevin Warsh to stabilize or even raise the fed funds rate even as he is under intense pressure from President Trump to cut it.
Last week’s Employment Situation Summary and JOLTS (Job Openings and Labor Turnover Survey) both showed strong employment news.
Bureau of Labor Statistics
Employment Situation Summary - 2026 M05 Results
Total nonfarm payroll employment increased by 172,000 in May, and the unemployment rate was
unchanged at 4.3 percent, the U.S. Bureau of Labor Statistics reported today. Job gains
occurred in leisure and hospitality, local government, and health care.
Bureau of Labor Statistics
Latest JOLTS Economic News Releases
Latest JOLTS Economic News Releases
JOLTS News Releases
April job openings increase; hires and total separations decrease
06/02/2026
The number of job openings increased to 7.6 million in April. Hires and total separations decreased to 5.1 million and 5.0 million, respectively. [end quote]
The BLS has dropped the Birth-Death adjustment which caused massive inaccuracies in the past. Now the Household and Enterprise employment numbers are matching closely. There probably won’t be large future adjustments anymore.
fred.stlouisfed.org
Unemployment Level/Job Openings: Total Nonfarm
Unemployment Level/Job Openings: Total Nonfarm
Unemployment Level/Job Openings: Total Nonfarm fell, showing that job seekers should have an easier time finding a job. This had been climbing for the past four years but suddenly reversed and is now under 1, showing that there are more job openings than unemployed people.
The unemployment rate (U-3) has leveled off at 4.3%. Although slightly higher than the post-Covid minimum it is lower than the lowest unemployment of economic cycles going back to 1970. In other words, unemployment is low.
fred.stlouisfed.org
Unemployment Rate
Unemployment Rate
Employers are holding on to employees because of the difficulty of finding workers post-Covid. It’s not easy to find a job if unemployed. The number of long-term unemployed as a fraction of unemployed people is rising and is now 27.5%.
fred.stlouisfed.org
Of Total Unemployed, Percent Unemployed 27 Weeks & over
Of Total Unemployed, Percent Unemployed 27 Weeks & over
Young people have a harder time finding a job than experienced workers but the situation isn’t bad from a historical viewpoint.
fred.stlouisfed.org
Unemployment Rate - 16-24 Yrs.
Unemployment Rate - 16-24 Yrs.
The employment statistics only track people who have actively searched for a job in the past month so I also look at the Labor Force Participation Rate - 25-54 Yrs. This looks very strong with the highest rate since 2000.
fred.stlouisfed.org
Labor Force Participation Rate - 25-54 Yrs.
Labor Force Participation Rate - 25-54 Yrs.
atlantafed.org
GDPNow
GDPNow forecasting model provides a "nowcast" of the official estimate prior to its release by estimating GDP growth using a methodology similar to the one used by the US Bureau of Economic Analysis.
The Atlanta Fed’s Latest GDPNow Estimate for 2026:Q2, Updated: June 01, 2026 is 3.0%. While this is lower than a couple of weeks ago it’s a strong, sustainable growth rate. The Atlanta Fed’s estimate and the Blue Chip consensus estimate are converging.
image
image1483×1024 138 KB
Economic activity in the manufacturing sector expanded in May for the fifth consecutive month, say the nation’s supply executives in the latest ISM® Manufacturing PMI® Report. The Manufacturing PMI® registered 54 percent in May, 1.3 percentage points higher than in April and its highest reading since May 2022.
Economic activity in the services sector continued to expand in May, say the nation’s purchasing and supply executives in the latest ISM® Services PMI® Report. The Services PMI® registered 54.5 percent, the 23rd consecutive month in expansion territory. In May, the Services PMI® registered 54.5 percent, an increase of 0.9 percentage point compared to April’s figure of 53.6 percent. Services represent 78% of GDP.
Both manufacturing and services are expanding according to the Purchasing Managers who have their noses to the grindstone. This confirms the Atlanta Fed’s analysis.
The other factor in the Fed’s fed funds rate decision is inflation. This is running hot.
Multpl
US Inflation Rate - Multpl
US Inflation Rate chart, historic, and current data. Current US Inflation Rate is 3.81%.
image
image890×481 45.4 KB
clevelandfed.org
Inflation Nowcasting
The Federal Reserve Bank of Cleveland provides daily “nowcasts” of inflation for two popular price indexes, the price index for personal consumption expenditures (PCE) and the Consumer Price Index (CPI). These nowcasts give a sense of where inflation...
image
image1145×249 5.32 KB
As a result, the options market is pricing in no fed funds cuts in 2026. The probability of a fed funds rise is 50:50.
https://www.cmegroup.com/marke...
If you look at the SOFR and Fed Funds futures curves, fixed-income markets are actively adjusting for a rising policy path rather than a flat line, with the Market Implied Fed Funds Rate over 4% by Sept-2027. That is using CME’s default of a stable fed funds rate, one 25 bps rise in March and Sept 2027. You can play around in this interactive chart. I think the Fed is past due raising the fed funds rate but I’m not on the FOMC…where at least 3 governors agree with me.
https://www.cmegroup.com/marke...
Far more important for the economy than the overnight fed funds rate is the 10 year Treasury bond yield. The 10 YT yield jumped on Friday (price fell). But the 2 year yield jumped more than the 10 year, showing that traders see a bigger danger of near-term inflation but think the Fed will eventually get it under control. The 10 year Treasury yield has been rising since mid-2021 and is now 4.51%. The 10 year TIPS yield is 2.11% so the inflation breakeven is 2.40%. A real yield of over 2% means that even after adjusting for a stubborn 2.4% long-term inflation outlook, investors are demanding substantial structural compensation to lock up capital for a decade. ZIRP is dead dead dead and the bond market doesn’t expect to return…regardless of what President Trump craves.
fred.stlouisfed.org
Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted...
Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis
fred.stlouisfed.org
Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted...
Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis, Inflation-Indexed
The Chicago Fed’s National Financial Conditions Index (NFCI), which provides a comprehensive weekly update on U.S. financial conditions in money markets, debt and equity markets, and the traditional and “shadow” banking systems showed tighter financial conditions in Week Ending May 29. Conditions are still very loose. Financial stress is very low.
The stock market took a sharp dip on Friday. It’s rather amazing that the market has continued to rise into bubble territory even as the Strait of Hormuz continues to be blocked by Iran and oil reserves are falling.
To combat skyrocketing domestic gasoline prices (which hit a national average of $4.30 per gallon) and support global markets, the U.S. and its International Energy Agency (IEA) partners initiated massive emergency releases. Commercial as well as government stockpiles are declining. West Texas Intermediate (WTI) crude is trading around $91.16 per barrel—nearly $30 higher than this time last year.
Even if diplomatic channels open and maritime shipping lanes normalize, Saudi Aramco and global logistics desks are already warning that replenishing these depleted commercial and strategic reserves back to safe baselines will stretch well into 2027.
I hardly read the news about the U.S.-Iran negotiations anymore. I’ll believe it when I see it. The Iranians have a loooonnngggg history of stretching out negotiations.
If the Strait of Hormuz remains closed until November, it could become “That 70’s Show” all over again. I remember those gas lines like yesterday.
Petroleum analysts, including GasBuddy, warn that if the timeline extends into the late autumn, retail gasoline will easily blast past the $5.00-a-gallon mark nationwide, likely peaking between $5.25 and $5.50 per gallon.
In high-tax or supply-isolated regions like the West Coast, prices could realistically breach $6.50 to $7.00. Not to mention diesel, which is already over $6 per gallon in this area and impacts all products due to delivery trucks.
That is clearly inflationary. It’s a tax on household spending so it’s also a hit to the real economy. Classic stagflation.
The stock market finally woke up on Friday and shuddered. The indexes dropped and VIX jumped. But that might have been noise. Only time will tell if the trend has changed since the indexes are still close to all-time highs.
The Price to earnings ratio based on average inflation-adjusted earnings from the previous 10 years, known as the Cyclically Adjusted P/E Ratio (CAPE Ratio) remained near its bubble peak.
image
image890×384 35.7 KB
The Fear & Greed Index fell from Greed into Fear but not extreme. Both stock and 10 Year Treasury prices fell but stocks fell more. The drop was concentrated in the high flying tech stocks where higher interest rates impact the valuations. These represent an outsized portion of the SPX. Stocks within the S&P 500 were actually close to evenly split between gainers and losers. Value-oriented, defensive sectors like Consumer Staples, Utilities, and Healthcare held up or finished the day in the green.
USD, natgas and copper rose. Gold, silver and bitcoin fell. Bitcoin fell hard.
The METAR for next week depends on your financial microclimate. If you are exposed to high-beta stocks you may have a thunderstorm. If you are in the rain shadow of low-beta stocks and bonds the METAR is sunny. There’s no indication of a financial crisis so the trend will probably hold.
Wendy
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
stockcharts.com
CandleGlance | StockCharts.com
Quickly and easily view and analyze mini-charts of up to 12 different symbols simultaneously, all displayed side-by-side on a single page
stockcharts.com
Dynamic Yield Curve | StockCharts.com
Visualize the relationship between interest rates and stocks over time using our draggable, interactive yield curve charting tool.
CNN
Fear and Greed Index - Investor Sentiment | CNN
CNN’s Fear & Greed Index is a way to gauge stock market movements and whether stocks are fairly priced. The index uses seven market indicators to help answer the question: What emotion is driving the market now?
chicagofed.org
National Financial Conditions Index: Current Data - Federal Reserve Bank of...
fred.stlouisfed.org
St. Louis Fed Financial Stress Index
St. Louis Fed Financial Stress Index
https://www.ismworld.org/suppl...
https://www.ismworld.org/suppl...
Multpl
Shiller PE Ratio - Multpl
Shiller PE Ratio chart, historic, and current data. Current Shiller PE Ratio is 41.57, a change of -1.13 from previous market close.
read 4 min