- Federal Reserve officials expect to raise the federal-funds rate by 0.50% in both June and July
- The personal savings rate in April was 4.4%, the lowest level since 2008
- Natural gas futures contract prices hit $9 per million British thermal units last week
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.