This Weekly Financial Markets Update reviews the top market headlines: Fed Minutes Signal Additional Rate Increases, Consumers Dipping into Their Savings, Natural Gas Prices Soar

Top Three Market Headlines

Fed Minutes Signal Additional Rate Increases: Minutes released last week of the Federal Reserve's latest meeting in May revealed that Fed officials supported the idea of raising the central bank's benchmark interest rate, the federal-funds rate, by a half-percentage point at each of the Fed's next two meetings in a continuing bid to tame inflation. Such moves, combined with this month's half-percentage point increase, would put the benchmark rate at a range of 1.75%-2.00% by July. The path forward from there is less clear yet, as various Fed governors in recent weeks have expressed different views about the pace of subsequent increases.

Consumers Dipping into Their Savings: According to the Bureau of Economic Analysis, personal consumption expenditures, or the value of goods and services purchased by U.S. residents, rose in April by 0.9% over March's level, the fourth straight monthly increase. Categories that saw the strongest gains in April included motor vehicles, food services, accommodations, and utilities. At the same time, also for the fourth straight month, disposable personal income rose at a lesser rate than personal expenditures, meaning that consumers are increasingly dipping into their savings. Reflecting this, the personal savings rate of U.S. households fell in April to 4.4%, the lowest level since September, 2008.

Natural Gas Prices Soar: Prices for natural gas futures contracts hit $9 per million British thermal units (BTUs) last week for the first time since 2008. Prices have risen approximately 20% over the last month and tripled over the past year. The surging prices have come amid declining inventories resulting from muted levels of production and increasing demand for liquefied natural gas among European buyers seeking non-Russian gas sources. Given the wide-ranging use of natural gas in producing electricity and products such as fertilizer, plastic, and cement, its rise has contributed significantly to the current inflationary environment as producers try to pass on the higher cost of the fuel to consumers.

As of May 31, 2022 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 5.04% -7.91% -12.84% -6.45%
S&P 500 6.62% -7.98% -12.21% 0.41%
Russell 2000 6.49% -8.64% -15.51% -16.01%
MSCI EAFE 3.48% -5.88% -11.45% -10.14%
MSCI Emerging Markets 0.91% -8.23% -14.63% -21.15%
FTSE NAREIT 5.55% -9.47% -12.96% 5.75%
Bloomberg Commodity 2.57% 7.75% 35.28% 44.60%
Barclays U.S. Aggregate 0.78% -2.69% -8.47% -7.65%

WSJ 5/25/22, WSJ 5/26/22, 5/27/22, BEA 5/27/22, Federal Reserve Bank of St. Louis 5/27/22, Bloomberg 5/27/2022. 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.