Despite mitigated indicators, investors have chosen to focus on the one good thing that happened in June – The Fed did not raise interest rates during their June FOMC meeting.

While the US job market remains very healthy, more and more consumer surveys seem to indicate less willingness to spend in the coming months, likely linked with draining savings accumulated during the COVID years. At the end of the day, it is the American consumer that will dictate if there is a recession or not and a decrease in consumption is not a good sign.

With about 50% of the S&P500 companies having published their Q1 results, the observation is overwhelmingly positive on a relative basis, with over 80% of companies beating expectations.

In the US, after the banking storm, markets picked up, closing strongly in positive territory, erasing the February losses. The US job market is still strong and remains the main driver of growth, but if it is any indication of what is to come, management calls with investors mentioned, for the first time in a while, more often the terms “job cuts” than “labor shortage”.

The month actually started on a strong note, in continuation to January, but then came the very good US job data. The good figures indeed are synonymous with strong consumption, but the Fed is trying to slow down demand in order to keep inflation under control. It would prefer a recession than a spiraling inflation.