By John Stewart
Chief Investment Officer at Farmers Trust Co.
Week in Review: Will Interest Rates Rise?
Everyone came into 2026 expecting more rate cuts, especially if President Donald Trump got his pick for chairman of the Federal Reserve.
Well, Trump got what he wanted – Kevin Warsh has been confirmed as head of the Fed, but the market doesn’t seem to think rate cuts are coming – in fact, market pricing now has a rate hike as more likely than a cut by the end of this year.
Inflationary pressures are to blame, which is driven at least in part by the persistence of higher oil prices due to the Iran conflict and continued closure of the Straight of Hormuz.
The rate on the 10-year Treasury has jumped from 4.25% to over 4.6% in just the past month, which has started to put downward pressure on stock valuations and caused some recent near-term volatility.
Earnings trends still look attractive at the moment but could start to weaken if the status quo persists or, certainly, if it gets any worse.
Featured Insight: Don’t Underestimate Brand Equity
Traditional financial analysis and investment analysis focuses a lot on dissecting balance sheets and income statements – and for good reason.
It’s important to know what a company’s return on assets or return on equity is.
Over the past 20 to 25 years, we’ve seen a fairly persistent increase in price-to-book ratios.
One of the reasons for this could be the value of brand equity, which accrues fairly significantly to the iconic brands like Coca-Cola, Starbucks and McDonald’s.
Actually assigning a brand value is tricky, but financial professionals are increasingly working on making it a part of their overall analysis when it comes to making investment decisions.
Looking Ahead: Economic Data Ahead of June
It’s a holiday-shortened week next week, but there will be plenty of data for investors to parse through.
Consumer confidence numbers will be reported Tuesday – recent numbers in this department have been downright awful, and Walmart’s lackluster earnings report highlights some softness in consumer spending, especially at the lower end of the income spectrum.
Durable goods orders and new home sales will be reported Thursday, and Friday will include a deluge off data including the second revision to first-quarter GDP, personal income and spending numbers, as well as some new inflation data.
Now that earnings season is essentially in the rear-view mirror, it will be the high-frequency economic data that drives the market for the next four to six weeks.