Midyear Macro Check-In
We are halfway through the year, and we’ve got some reasons to feel optimistic. Good news first: consumer confidence just posted its biggest one-month jump in over three years. The Conference Board’s May reading leapt 12.3 points to 98.0—up from 85.7 in April—as households grew more upbeat about job prospects and cooling inflation.¹ That more confident consumer underpins our view that the economy can keep expanding at roughly 2% even as the Fed sticks to its “higher for longer” playbook.
Whether you’re scanning market headlines or just planning your next vacation, here’s a rundown of what’s shaping the macro landscape—and what it could mean for your portfolio.
Rate Watch
Bond yields have been relatively flat since late March, but two big-picture forces continue to apply pressure:
Soaring deficits. The projected fiscal-year 2025 deficit is $1.9 trillion—nearly 6.5% of GDP. That’s on track to be the third-largest shortfall ever outside of wartime or a recession.²
30-year Treasury retests the 5% line. On May 21, the yield briefly touched 5.03%—only the second time since 2007 that it crossed this key psychological threshold.³
Why this matters: higher long-term bond yields directly influence mortgage rates, corporate borrowing costs, and valuation models. A sustained 100-basis-point move can shave about 0.4% off GDP and strain debt-heavy sectors like commercial real estate and utilities. Meanwhile, the 10-year note is holding near 4.4%, keeping money market funds attractive.⁴
We continue to ladder short-term T-Bills (6–12 months) for liquidity but are selectively adding 7–10 year Treasuries in tax-advantaged accounts to lock in real yields before rising deficits—and increased supply—push rates even higher.
Equities: A Pause That Refreshes?
The S&P 500 is up just 0.5% YTD, but the story beneath the surface is more nuanced:
The “Magnificent Seven” mega-cap stocks have delivered over 40% of the index’s return since April 8, even with a spring dip.⁵
The equal-weight S&P 500 is up 1.3% YTD—its best relative performance versus the cap-weighted index since 2021, a sign that market breadth may be improving.⁶
May’s 6.2% rally was the strongest monthly gain since November 2023, even as long rates flirted with 5%.⁷
Here’s an interesting stat: only four other times in the past 25 years have we seen consumer confidence jump by double digits in the same month that the 30-year Treasury hit a cycle high. In three of those, the S&P 500 was higher six months later—driven by earnings optimism. In the fourth (2000), we got a valuation reset. The takeaway? Confidence can fuel stock gains, but stretched valuations and higher discount rates raise tail risks.
We continue to broaden exposure—tilting new money toward quality small- and mid-caps and the equal-weight S&P 500 to capture potential catch-up gains.
Planning Corner: Five Midyear Moves
Midyear is a great time to revisit your plan. Five smart things to do now:
Consider Tax-Advantaged Strategies. Check progress toward your 401(k), Owner-K, and HSA limits.
Roth Conversions in a Sideways Market. Lower prices = more shares inside the tax-free wrapper.
Harvest Losses, Not Just Gains. Market dispersion means there may be red to use.
Check Your 529 Before June 30. States like Virginia tie deductions to fiscal-year contributions.
Reprice Your Cash. If it’s earning under 4%, it may be costing you.
Compliance Spotlight
The SEC’s proposed Enhanced Safeguarding Rule is inching toward final form. Expect it to bring surprise exams for nearly all discretionary accounts. Want help reviewing your workflows before it lands? Just let us know.
What We’re Watching Next
June 11 – May CPI (Consumer Price Index):
A key inflation gauge. If CPI readings remain sticky, it could delay interest rate cuts—keeping borrowing costs higher for longer. If inflation cools meaningfully, the Fed may feel more confident about easing.
June 18 – Federal Reserve Rate Decision & “Dot Plot”:
The Fed will announce whether it’s holding, raising, or lowering rates. More importantly, the updated “dot plot” (a visual summary of policymakers’ interest rate forecasts) gives insight into how many cuts—if any—are still expected this year.
Early July – Q2 Earnings Season Begins (Starting with Banks):
Large banks are among the first to report each quarter, and they’re particularly sensitive to rate changes. Their results will offer a first look at how higher interest rates are affecting loan demand, credit quality, and consumer activity.
No matter what summer brings, we’re here to help you stay informed and aligned with your goals. Questions about the new consumer mood, market leadership, or fixed income strategy? Send us an email at: admin@middlebrookwealth.com or give us a call at 540-712-0288.
Thank you,
The Middlebrook Wealth Team
References
The Conference Board. (2024, May). Consumer Confidence Survey. https://www.conference-board.org/topics/consumer-confidence
Congressional Budget Office. (2024). Budget and Economic Outlook: Fiscal Years 2025 to 2034. https://www.cbo.gov/publication/58946
Roic AI. (2024, May 21). 30-Year Treasury Yield Data. https://www.roic.ai/
Advisor Perspectives. (2024). Bond Market Commentary. https://www.advisorperspectives.com/
Reuters. (2024, May). Stock Market Performance – Magnificent Seven. https://www.reuters.com
YCharts. (2024). Equal-Weight S&P 500 Performance. https://ycharts.com/
Investopedia. (2024, May). Monthly Market Review. https://www.investopedia.com/
Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser. Securities offered through NewEdge Securities, LLC. Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC.
The information in this material is not intended as tax or legal advice. Please consult your legal or tax professionals for specific information regarding your individual situation. This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
