F.N.B. Wealth Management Fast Five

2. What happened during June's Federal Open Market Committee (FOMC) meeting?

A new era began at the Federal Reserve in June as Kevin Warsh became the fifth Federal Reserve Chairperson in the last 40 years. Here are some takeaways from Mr. Warsh’s first meeting as Chair:

• The U.S. Federal Reserve chose to keep the Fed Funds Target Range at 3.50% to 3.75%. This was the expected outcome given the condition of their dual mandate and new leadership. This was the fourth meeting in a row that the Committee left rates unchanged.
• The Committee’s tone has shifted from an easing bias to something more hawkish. The Committee was unanimous in their decision (though Chair Warsh did say they “had a good family fight”) and the dot-plot did not have a submission from the Fed Chair.
• The Committee held steady on the belief that their current stance is somewhat restrictive but also said “economic activity is expanding at a solid pace despite elevated uncertainty”, “productivity growth and capital investment are strong” and “job gains have kept pace with the workforce”.
• Mr. Warsh also announced the formation of five task forces focused on: Fed communications, the Fed’s balance sheet, the data sources they use, productivity and jobs data, and the inflation framework.
• Finally, in a much more direct communication style, the Committee proclaimed they will deliver price stability.

3. Speaking of price stability, what are the takeaways from the inflation data released in June?

The global energy shock has had a material impact on prices across most sectors and industries resulting in higher prices for businesses and consumers, but the recent data has signaled the U.S. could be reaching a near-term peak in inflation.

• Personal Consumption Expenditures (PCE) data for May showed an increase of 0.45% month over month (m/m), bringing it to +4.1% year over year (y/y), up from 3.8% y/y in the prior month.
• Core PCE (ex-food and energy) was +0.32% m/m to 3.4% y/y. Two-thirds of the gains in Core PCE were attributable to portfolio management fees (+4.9% m/m) and airfares (+3.1% m/m) and healthcare (+0.4% m/m).
• This is interesting because the first two items have been reactive to current events (i.e. market declines in April brought portfolio management fees down and the rebound in May resulted in a nearly 5% increase m/m, while international airfares are responding to higher energy costs but also resilient demand). Both are expected to level off during the summer.
• The Strait of Hormuz opened to commercial traffic in late June, and the price of oil has dropped significantly (WTI at $68.58/barrel as of 7/1/26). This quickly brought down global shipping costs as the cost to move a supertanker of oil from Saudi Arabia to China dropped from $514,000 on 6/23/26 to $287,000 on 6/26/26 (that was a 44% drop in just a few days).
• It is also welcome news for the world’s crop supply as a significant amount of global fertilizer supply is now sailing again. Here in the U.S., urea, which is a widely used nitrogen fertilizer, is down 36% from its high in April. The lower input costs should have a positive impact on future food costs.

4. Are U.S. consumers still doing okay given the increased cost of daily items like gasoline?

U.S. consumer sentiment (how consumers feel) remains near the lowest levels since the 1970s, but the situation isn’t as negative as recent surveys suggest. Here’s why:

• U.S. retail sales for May beat expectations coming in at +0.9% m/m versus +0.6% m/m consensus expectations. That was the fourth straight month of gains.
• A portion of the jump in monthly retail sales was attributable to +3.4% m/m increase in gas station receipts. Excluding gas stations, the monthly increase was 0.7% m/m.
• There were monthly gains in 11 of 13 categories.
• Real personal spending also picked up in May by +0.3% m/m after being flat in April.
• Goods rebounded +0.5% m/m from April while services were +0.2% m/m.
• Personal income (unadjusted for inflation) surprised to the upside, jumping +0.7% m/m with wages/salaries accounting for +0.4%. Disposable income (the inflation adjusted number) rose +0.3% m/m, which was the first monthly increase this year.

5. What is the Chief Investment Office monitoring in July?

It doesn’t look like financial markets are going to take a vacation from potential volatility this July. Here is what we are watching:

1. Corporate earnings reports for Q2 are the biggest thing on our radar for July. During the first quarter, the S&P 500 saw 83.4% of companies beat expectations and earnings per share jumped 29.6% at the index level. As such, consensus expectations are very high for Q2 +22.7% (as of 6/26/26)
2. Key inflation measures like the U.S. Consumer Price Index (CPI), Producer Price Index (PPI) and PCE may show if the U.S. is at or near peak inflation for this year since the Strait of Hormuz reopened to commercial traffic at the end of the month and oil prices have returned to pre-war levels.
3. The July Fed meeting will give financial markets a second look at the Committee’s new communication style under Chairman Warsh. A lack of forward guidance and significantly scaled-down commentary could add to speculative market activities as investors try to anticipate what the Fed may do later this year.

Charts of the Month

U.S. Employment Appears Stable Despite Slowdown:

Hiring in the U.S. slowed in June as the nonfarm payrolls report showed 57,000 jobs gained during the month, which was well below consensus estimates of +115,000. Adding to the softness of the report was a net two-month revision of -74,000 jobs. The headline unemployment rate dropped to 4.2% from 4.3% but the participation rate also dropped to 61.5%. For “prime age” workers, 25 to 54, the participation rate dropped to 83.3, the lowest level since 2023. A bright spot in the report was the job gains in manufacturing and construction, two sectors that have struggled for several quarters. Unfortunately, hospitality and leisure had its biggest contraction since 2020, and the information sector has now had declines in 17 of the last 18 months. There are, however, more job openings available than in prior months.

U.S. Unemployment Rate vs. Job Openings

U.S. existing home sales increased at the fastest pace of the year in May, +3.2% m/m to 4.17 million units annualized. First-time homebuyers represented 35% of sales during the month, which is the highest level since June 2020. That helped drive the median sale price up 1.3% from a year earlier to $429,300. Unfortunately, the U.S. Homebuilders Index dropped 2 points to 35 in June. June was the 14th straight month below 40. That’s the longest streak since 2011-2012. It was also the 15th month in a row that at least 60% of respondents said they were using sales incentives to move inventory. May U.S. housing starts decreased 15.4% m/m to an annualized rate of 1.8 million units. The biggest driver of the decline was a -40.2% drop in multifamily starts. This is the slowest pace since 2020. Building permits, an indicator of future activity, dropped 0.7% m/m, suggesting pricing pressures are likely to continue.

Existing Home Sales vs. Inventory Levels