This Weekly Financial Markets Update reviews the top market headlines: Inflation Stays Red Hot, Euro Hits Parity with U.S. Dollar, Retail Sales Rebound from May
  • The CPI rose 9.1% on an annual basis in June
  • The euro has fallen more than 11% in value versus the U.S. dollar in 2022
  • Retail sales rose 1.0% in June over the prior month

Top Three Market Headlines

Inflation Stays Red Hot: The U.S. Department of Labor reported last week that the Consumer Price Index (CPI) rose 1.3% in June from the prior month; on an annual basis the increase was 9.1%, a fresh 40-year high. The "core" CPI, (which excludes volatile categories such as food and energy) increased 0.7% from the prior month, or 5.9% on an annual basis. Price increases in June were widespread across many products. The energy index rose 42% versus the prior year, keyed by soaring gasoline prices (+60%, the largest increase since March 1980). Food prices, meanwhile, rose 10.4% from last year, with five of six major grocery store food indexes rising more than 10%.

Euro Hits Parity with U.S. Dollar: The common currency of 19 European Union member states, the euro, last week traded at equal value to the U.S. dollar for the first time since 2002. The euro has fallen more than 11% in value versus the U.S. dollar in 2022, and nearly 15% over the prior 12 months (through last Friday). The U.S. dollar has been rallying against many major currencies for more than a year, as investors around the world gravitate to the perceived safety of the currency amid growing financial market stresses and uncertainty surrounding the outlook for the global economy. A measure of the U.S. dollar versus a basket of foreign currencies, the ICE U.S. Dollar Index, has surged 12.5% year-to-date.

Retail Sales Rebound from May: After declining in the prior month, sales at retail and food service establishments rose 1.0% in June versus May, according to the Commerce Department. Gasoline and food services were among the categories posting the largest monthly increases, at 3.6% and 1.0%, respectively. Versus the prior year, total retail sales grew 8.4%, a modest improvement from May's 8.2% annual gain. Notably, however, the reported sales figures are not adjusted for price changes; therefore, after excluding the effect of rapidly rising prices across many businesses, the amount of total retail sales on a real (i.e., inflation-adjusted) basis likely remained much more subdued.

As of July 18, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -1.60% 0.40% -19.86% -15.90%
S&P 500 -0.91% 2.12% -18.27% -10.09%
Russell 2000 -1.40% 2.17% -21.76% -19.40%
MSCI EAFE -1.75% -1.55% -20.81% -19.31%
MSCI Emerging Markets -3.69% -3.54% -20.54% -26.70%
FTSE NAREIT -0.38% 0.52% -19.78% -9.38%
Bloomberg Commodity -2.07% -2.98% 14.91% 21.09%
Barclays U.S. Aggregate 0.89% 0.62% -9.80% -10.41%

U.S. Bureau of Labor Statistics 7/13/2022, WSJ 7/13/2022, WSJ 7/14/2022, U.S. Census Bureau 7/15/2022, FactSet. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Gallagher Fiduciary Advisors, LLC ("GFA") is an SEC Registered Investment Adviser that provides retirement, investment advisory, discretionary/named and independent fiduciary services. GFA is a limited liability company with Gallagher Benefit Services, Inc. as its single member. GFA may pay referral fees or other remuneration to employees of AJG or its affiliates or to independent contractors; such payments do not change our fee. Securities may be offered through Triad Advisors, LLC ("Triad"), member FINRA/SIPC. Triad is separately owned and other entities and/or marketing names, products or services referenced here are independent of Triad. Neither Triad, Arthur J. Gallagher & Co., GFA, their affiliates nor representatives provide accounting, legal or tax advice.