Doc’s Economic Insights

June 14, 2024


During April, an unexpected increase in the rate of inflation pressured both stock and long-term bond valuations.  The S&P 500 declined approximately 5% and the yield on the bell weather 10-year Treasury rose from 4.2% to 4.7%.  (Higher yields mean lower prices for bonds.)  These losses were short lived.  Stocks began to rally back at the beginning of May and US stock indices set several new record highs in June.  The recovery in the bond market was more gradual, but the yield on the 10-year Treasury had declined below 4.1% by mid-June.  The only enduring impact of April’s inflation reports was to make the US Federal Reserve more cautious about lowering interest rates.  As reported after the close of the June Federal Open Market Committee meeting, Federal Reserve governors now expect to cut rates only once this year.  Given the Fed’s historic reluctance to act immediately before a Presidential election, it appears that the Fed is unlikely to cut rates before December.

Although the financial markets are likely to become more volatile as the Presidential election draws closer, we remain optimistic about the stock and bond markets’ long-term prospects.  First and foremost, the US economy is healthy and likely to remain so. Second, investment valuations outside of the technology sector are attractive.  For further details on each of these points, please see below.


The Economy:

  • At 4% the US unemployment rate remains near historical lows and the economy continues to add new jobs each month – suggesting the labor market remains healthy.
  • Although April reports showed an unexpected increase in price inflation, more recent reports have shown a return to the downward trend in the rate of inflation.  Federal Reserve governors continue to signal that they expect to lower the Fed Funds rate sometime during 2024.
  • Corporate earnings are on track to grow by 9% or more during 2024.



Investment Valuations:

  • The stock market rally continues to be driven by a small number of technology stocks.  Many stocks outside this elite group have attractive valuations.  This is a great environment for active stock managers.
  • Bonds are attractively priced.  With the rate of price inflation resuming its decline and the Fed signaling that they expect to lower borrowing costs by year end, it is likely bonds will appreciate during the second half of the year.




This report has been generated from information that Arbor Financial believes to be reliable and accurate. We do not represent or warrant the accuracy or completeness of the information contained in this report. As such, all calculations, estimates, and opinions included in this report constitute our best judgment as of this date and may be subject to change.

Written by

Peter has more than 25 years of experience in the financial industry as a researcher, strategist, and portfolio manager.  As a portfolio manager at Arbor, Peter performs quantitative analysis on current and prospective portfolios.

Peter is a CFA charter holder.  He earned his PhD in Economics as well as dual Bachelors of Science degrees in Computer Science and Pure Mathematics from the University of California, Santa Barbara.

Before joining Arbor, Peter was a Founding Member of institutional money manager OakBrook Investments and worked there for 22 years serving in a variety of roles including portfolio manager, Director of Research, and co-Chief Investment Officer.  Prior to forming OakBrook, Peter worked at ANB Investment Management & Trust Company as a strategist, portfolio manager, and Head of Research.

Peter has lived in Lisle, Illinois since 1997.  Outside of work he enjoys sports car racing and is an active member of the Autobahn Country Club in Joliet, Illinois and the Sports Car Club America (SCCA).