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We gather data and information from specialized sources and financial databases including but not limited to Bloomberg Finance L.P., Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange (CBOE) Volatility Index (VIX), Dow Jones / Dow Jones Newsplus, FactSet, Federal Reserve and corresponding 12 district banks / Federal Open Market Committee (FOMC), ICE BofA (Bank of America) MOVE Index, Morningstar / Morningstar.com, Standard & Poor’s and Wall Street Journal / WSJ.com.
Key Wealth, Key Private Client, Key Private Bank, Key Family Wealth, and KeyBank Institutional Advisors are brand names used by KeyBank National Association (KeyBank). Key Wealth and Key Private Client are also brand names used by Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor.
The Key Wealth Institute is comprised of financial professionals representing KeyBank National Association (KeyBank) and certain affiliates, such as Key Investment Services LLC (KIS) and KeyCorp Insurance Agency USA Inc. (KIA).
Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual author(s), and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.
This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy.
KeyBank, nor its subsidiaries or affiliates, represent, warrant or guarantee that this material is accurate, complete or suitable for any purpose or any investor and it should not be used as a basis for investment or tax planning decisions. It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal or financial advice.
The summaries, prices, quotes and/or statistics contained herein have been obtained from sources believed to be reliable but are not necessarily complete and cannot be guaranteed. They are provided for informational purposes only and are not intended to replace any confirmations or statements. Past performance does not guarantee future results.
Brokerage and certain investment advisory services are offered through Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor. Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA) and underwritten by third party insurance carriers not affiliated with KIS. KIS and KIA are affiliates under the common control of KeyCorp. To learn more about KIS’s investment business, as well as our relationship with you, please review our KIS Disclosure page. Check the background of KIS on FINRA's BrokerCheck.
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Brian Pietrangelo [00:00:00]
Welcome to the Key Wealth Matters weekly podcast where we casually ramble on about important topics including the markets, the economy, human ingenuity, and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, June 12th, 2026. I'm Brian Pietrangelo and welcome to the podcast. another robust week if you are a sports fan again the Stanley Cup NHL competition in full swing we've also got the NBA finals with some great competition there but also more special than others we have the FIFA World Cup underway with many games friendlies and then also on to the competition round soon and next week also on a patriotic note as we head into the weekend on Monday June 14th we celebrate Flag Day Flag Day is an annual observation created in the United States back on 1777, I should say, in a resolution by the Second Continental Congress, and it honors the adoption of the first official U.S. flag known as Stars and Stripes, which originally featured 13 alternating red and white stripes and 13 white stars on a blue field to represent the original colonies. So just like other holidays for the United States, it might be a great idea to fly the flag on Monday in observation of Flag Day. With that, I would like to introduce our panel of investing experts here to share their insights on this week's market activity and more. George Mateyo, Chief Investment Officer, Steve Hoedt, Head of Equities, and Rajeev Sharma, Head of Fixed Income. As a reminder, a lot of great content is available on key.com/wealthinsights, including updates from our Wealth Institute on many different subjects and especially our Key Questions article series addressing a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at this week's market and economic data, we've got three key economic releases for you this week, two on inflation and one on employment. Other than that, it was a pretty light week for economic releases. So first up we have the announcement from the Bureau of Labor Statistics on the Consumer Price Index known as CPI for the month of May. Not a surprise here, the numbers did increase a little bit above expectations for the all items came in at 4.2% year over year for the month of May. and that was above last month. When we take out food and energy, it was up 2.9% over the last 12 months. Again, up a little bit from the prior month. Not a surprise there that some of the drivers of that increase were energy prices and consideration of oil. In addition, the following day we also received the producer price index, which showed again significantly elevated data for the producer price index for final demand rose significantly in May, roughly the largest increase we had seen since November of 2022. If we take that in terms of the overall annual rate, we look at the largest advance for the 12 months ended in May, moved up 5.1%, the largest 12 month increase since October of 2022. So again, a lot of inflation data continuing to show elevated numbers as a result of oil increases and other derivative factors. And we will continue to take this into consideration for what this means for the economy and the Federal Reserve. And 3rd or finally, just yesterday as well, the weekly initial unemployment claims report came out for the week ending June 6th, and it came in at 229,000 for the week, which was mildly above the week prior, but again continues to remain stable for mostly the last 2 1/2 years in this arena. So ultimately we take into consideration some small bit of inflation data plus some jobs data as we look forward to the Federal Open Market Committee meeting next week, which will be the first for Kevin Warsh as the new chair. In other news, we have more news on what's going on in Iran with some back and forth with Iran and the United States on a military action as well as something close to a memorandum of understanding. We'll talk to George about that. And today, Friday, June 12th, is the launch of SpaceX IPO. We'll get Steve's take on that as well as a general conversation with Rajiv on what's happening in the bond markets. So, George, let's turn to you first to get your quick update on what's happening in Iran as well as what's happening in the economy relative to inflation that we just discussed. George.
George Mateyo [00:04:52]
So, Brian, there's lots of process this week with respect to the situation in Iran, and I think to some extent not too much has changed, although it does need noting, I guess, that we kind of started this week with a likelihood or a possibility anyway of some re-escalation, if you remember where we were just four or five days ago or so now, Monday or so, late Sunday night last week, there was some thought that maybe we'd probably see bombs going off again and missiles being dropped and maybe the risk of a broader conflict as well. But in the past few days or so, there's been a lot of rhetoric and maybe this somewhat nullifies the concept of a ceasefire. One could debate that, I guess, in many ways. But as of Lately yesterday, on Thursday afternoon, it seemed to suggest the president had struck a deal. He talked about this memo of understanding that suggests that maybe the two parties have come together. Incidentally, the Iranians have not responded. And furthermore, I think the Israelis have kind of backed away from that too, in the sense that they said they were somewhat surprised by the president's comment that things were pretty much all wrapped up, I think was the quote. So I think it's fair to say that there's still a lot of uncertainty with the situation. I think it's fair to say that we probably are getting closer to some type of thaw. While this is kind of the ultimate end of the conflict, I think it's far to be seen. But I think it's also fair to say that neither party want to see a real protracted conflict. In other words, when we start to see tensions a little bit, they're very quickly brought down again. So maybe it's the theory of re-escalating to de-escalate. And that probably provides maybe Some context for how we might think about going forward is since there's kind of an on again, off again debate about this. And I think the bigger question, of course, is really the downstream economic impact from this that will probably take many weeks, if not months, to really sort through, even if there is a final resolution reached. So while we can all play geopolitical strategist in our spare time and think about what this might mean, I think for most portfolios, it does suggest that there's probably getting some volatility, we saw this, of course, this week. in the sense that the markets were a little bit soft beginning of this week, and then they rallied pretty strongly in the back half of the week once they thought the markets kind of responded to some thoughts that maybe we would see some relaxing of tensions. The bigger question, I guess, as I think about those, we think about once we get through this noise, of course, has to do with inflation. And some of the numbers out this week as we've been arguing now for quite some time, will remain a bit sticky. The overall, I think, producer price index, which looks at corporation inflation trends and so forth, that was a pretty hot report in the sense that we saw a pretty big jump across the board in terms of where we saw inflation in the energy sector. But beyond that, energy, of course, is the big item. But certainly, we're starting to see price pressures from the continued build out of AI. Capital spending, of course, is really a big part of that. And that was also quite elevated in many factors as well. I think it's also fair to say that things like airlines and some foreign demand from airlines especially was kind of called out in terms of inflation. Maybe that's the World Cup or other things, it's hard to say, but of course, there's also food inflation. We've seen tariffs now can be kind of applied as well. So altogether, I think inflation is still the issue that markets have to contend with. And as far as we see, it doesn't seem like it's coming down rapidly. So the thing that is kind of interesting is at the same time that we have a new Fed share, we have a new maybe Fed regime. The Fed incoming Fed share is probably on that keen on tightening rates and taking them up. But at the same time, I think at some point he has to address inflation. So we'll have to see how that plays out. Rajiv, maybe I'll get your thoughts on that in the sense that of course next week is an important week in the sense that it's Kevin Warsh's first meeting as chair. So how do you think about all this? What do you think the Fed might be thinking as well? And what do you think it means for the bond market, broadly speaking?
Rajeev Sharma [00:08:55]
No, George, it's very interesting. Maybe Kevin Warsh's first meeting. I think all eyes will be on that. The latest CPI and PPI reports that you pointed to, they really do push the Fed further away from any rate cutting bias. It keeps the Fed in more of a hawkish bias mode. Headline inflation is almost entirely being driven by the spike in energy prices and the Fed has to keep all that in mind and its inflation target in mind as well. So the Fed can't ignore the CPI and PPI reports. Core CPI is still somewhat close to the Fed's target. But the PPI jump is then, that's the number the Fed will be more concerned about amongst two reports because that's going to put a lot of pressure on consumer inflation later, which will impact the PCE report. And that PCE report is the one that the Fed is most sensitive to when making monetary decisions. PCE at 3.8% currently is still far above the Fed's target. And you mentioned PPI. I mean, that was the fastest move we've seen since 2022. These kind of moves forced the Fed to stay restrictive, and I think that makes Kevin Warsh's debut even more complicated. I think if you step back and think about overall monetary policy, you have Kevin Warsh and the Fed has to look at the latest inflation reports. These point to the fact that the Fed is not going to be cutting rates anytime soon. The Fed is also not likely to hike rates at next week's FOMC meeting. So these reports kind of give the Fed and Kevin Warsh some cover that they need to pause at next week's Fed meeting. And the Fed would need multiple months of data to assess before making really any decision on which direction they want to go. The markets, meanwhile, they should continue to expect rates to stay higher for longer. That keeps pressure on treasury yields and will keep them elevated, particularly in the front end, which is most sensitive to monetary policy. My anticipation of next week's FOMC meeting, yes, Kevin Warsh will be there. I anticipate him to have a press conference. We will get the summary of economic projections. We will get the latest dot plot. It's going to be very interesting to go through that data, even if. If the Fed is going to pause next week, which is expected, I think those pieces of information are being very important for the market. The dot plot is going to show us how many Fed members are dissenting right now, how many think that we should raise rates, how many Fed members think we should go status quo. That's going to be really important because if you think about what Kevin Warsh's future is going to be and what his inclination is going to be as far as monetary policy, he's going to need to build consensus in the Fed. You’re going to need voting Fed governors that are going to be on his side, whatever direction he starts to lean towards. And I do think, obviously, the Fed is going to pause next week. But what investors should really look out for when they see the meeting or when they hear from the meeting next week is the language of the Fed statement on the 17th of June when that report, when that statement is released. You should expect to see more hawkish language. You should expect to see a gradual shift in the language from an easing bias to a tightening bias. Investors should really look at the statement and start to see some pushback against the expectations of rate cuts and what the Fed is anticipating about energy prices and its impact on inflation. All these little pieces of evidence that we'll see in the statement, the press conference, the summary of economic projections are all extremely important. They will be market movers. Right now, the market does not expect the Fed to make any real moves at next week's meeting. The market does not expect the Fed to really do anything at the July and September meeting either right now. But the market is still putting close to 80% odds that we will have a rate hike by the end of the year. Now, if we look across the pond, the latest ECB action was very clear. It was a hawkish pivot. The ECB, the European Central Bank, they delivered their first rate hike since 2023 and they lifted all three key policy rates by 25 basis points. And their statement was very clear. It was all about energy driven inflation. So the move really makes the ECB the first major central bank to resume tightening in response to the energy price surge that we've seen from the war in the Middle East. So I think these things are very important. I mean, if you take another step and change Change tracks a little bit and look at credit spreads. It was a very interesting week on credit spreads. We saw absolutely nothing. Spread stayed exactly where they started the week out. There was no real big moves in credit spreads for both investment grade and high yield. In a way, that's a very good thing because it shows that that's a very healthy market. The corporate bond market's very healthy. Deals are getting done. Investor appetite is still there. You still want to keep an eye on some kind of investor complacency. But I really do think it's important for the credit markets to continue to be well-functioning, liquid that does help other risk assets as well.
Brian Pietrangelo [00:13:46]
Hey, Rajeev, if you think about the Fed, a couple other comments for our listeners as we'll be off next week. is that the dot plot no longer includes Stephen Myron all the way at the bottom. And it'll also be a new dot with Jay Powell, so to speak, in a different chair seat because he's no longer the chair. He's just a Fed governor. And also we talked about last week's strong employment report, which for the dual mandate puts even more pressure on a possible rate increase. Any color there?
Rajeev Sharma [00:14:12]
Yes, I do think the dot plot is going to be extremely important. You don't have Stephen Myron anymore who's really calling for rate cuts. He was the loudest voice that was calling for rate cuts. you're gonna start seeing a gradual shift towards at least being more neutral and more neutral in monetary policy. You'll start seeing some voices that are saying that we should have a rate hike by the end of the year because of inflation being so stubborn and moving in the wrong direction. We're not seeing any disinflationary trends. So that's gonna be an interesting piece of information. And again, as I mentioned, to build consensus at the Fed, that dot plot's gonna be very important. It'll show you exactly How many members are on the side of being hawkish? How many are dovish? The dovish voices have definitely gone away with Steve Meyer leaving. In fact, we even had Christopher Waller come out and say that he's also pointing towards we should be more neutral in our bias. So I think it's pretty very important.
Brian Pietrangelo [00:15:06]
So Steve, let's turn to you on the equity market in terms of some pretty interesting volatility this week a little bit and then the overall arching day today for the launch of SpaceX IPO.
Steve Hoedt [00:15:18]
Yeah, it was an interesting week. we pulled back and we bottomed earlier this week, right around the 50 day moving average. And we had talked before how with the market having basically been on a one way St. for the last three months, that we wouldn't be surprised to see a pullback. And it was good to see the decline stop in a shallow place at the 50 day. We turn around and we're bouncing right now. We did see volatility pick up, but what was really interesting to me was, for all the talk about the volatility explosion last Friday, we went back to, guess what, the long term. averages. 19 1/2 is the long-term average. We got as high as 22 during this explosion of volatility. And right now, today, we're at 1903. So we're sitting slightly below the long-term average for volatility. So I think people have gotten used to this idea that volatility is supposed to be low. And the truth of the matter is that what you see right now is really average. What really struck me this week about overall equity markets was that as we sit here this morning, we have the equal weight S&P 500 moving to a new all time high. So we're seeing equal weight outperform the broad market cap weighted index For I think it's one of the one of the first times in quite a long, quite a long while. I know George has talked about the broadening out and seeing things change here as we've seen the mag 7 we talked about on our national call earlier this week. It has been kind of a laggard since last October. That looks like it's continuing here. And you know, when you think about Mag seven weakness, it's a good segue to talk about SpaceX. You know, SpaceX priced its IPO last night at $135. Looks like it's going to open at some point today. Might be three o'clock this afternoon, might be noon, could be anytime between now and then, which is normal, by the way, for our listeners to have these big IPOs be delayed in opening on their first day of trading. looks like it could open north of $170, which would be great for those folks who managed to get shares. My understanding was there weren't too many people other than large sovereign wealth funds and a few large global funds that got shares. I think you're going to see people raising cash by selling stuff that is similar or has a similar exposure profile in order to put capital into that name. if people want to do so, which means likely you'll see some selling pressure on Mag 7, probably see selling pressure likely on Tesla, which is, you know, obviously you've got the Elon Musk true believer crew who is in Tesla, if they want to sell some of that to buy SpaceX, that will be happening too. So I think that what we see here is this idea that broader market exposure is probably the way to go right now and not be focused so much on these mega cap names that you're going to hear lots and lots about in the financial media over the coming few days.
Brian Pietrangelo [00:19:02]
Thank you, Steve. Appreciate the update. George, any closing remarks for our listeners today?
George Mateyo [00:19:07]
Well, as always, Brian, there's probably a lot we could summarize. Again, the way we kind of see things playing out is what Steve just said. is that the market continues to broaden out. And that actually is maybe a theme that we've talked about now for over a year. And it's good to see that finally coming to fruition to some extent because it's something we have been concerned about. We have been concerned about this rising level of concentration, meaning when you have a broad market narrative, and this is not to say we're bearish on AI or artificial intelligence as a theme, but when you have this one dominant theme that really takes hold of the overall investment landscape, It's important to understand that when that narrative does shift for whatever reason, as Steve pointed out, maybe it's a new company coming public and it really takes a lot of the energy from other parts of the market. Maybe it's the thing itself becomes a little bit tired and maybe it becomes somewhat old, if you will, and stale. It is important to stay diversified. And that's, again, something we've talked about a little bit, frankly a lot. It's a cliche to even talk about diversification, but it's one thing I think that up until the last year or so, it really was a little bit underappreciated. And I think now we're starting to see the benefits of really maintaining that focus on and staying diversified and also really kind of sticking to your knitting, right? I think there's probably an argument that some people are chasing performance a little bit in these markets. And I think to some extent that usually turns out to be a fool's errand in the long run. So staying diversified, staying disciplined, I think is going to be really important in these market environments. But overall, as we talked about, it's still staying invested, right? That doesn't mean to abandon your overall strategy because as Steve pointed out, and as Rajeev mentioned too, there's still a fair amount of tailwinds behind the economy and those things can really support earnings, which I'm sorry, which can in turn support stock prices. So that's how I would summarize where we are right now.
Brian Pietrangelo [00:20:54]
Well, thanks for the conversation today, George, Steve, and Rajiv. We appreciate your insights. And before we close the podcast, a quick program note, we'll be off next week on June 19th in observation of the holiday known as Juneteenth. So thanks to our listeners for joining us today and be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information and we'll catch up with you in two weeks to see how the world and the markets have changed and provide those keys to help you navigate your financial journey.
Disclosure [00:21:39]
We gather data and information from specialized sources and financial databases including but not limited to Bloomberg Finance L.P., Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange (CBOE) Volatility Index (VIX), Dow Jones / Dow Jones Newsplus, FactSet, Federal Reserve and corresponding 12 district banks / Federal Open Market Committee (FOMC), ICE BofA (Bank of America) MOVE Index, Morningstar / Morningstar.com, Standard & Poor’s and Wall Street Journal / WSJ.com.
Key Wealth, Key Private Client, Key Private Bank, Key Family Wealth, and KeyBank Institutional Advisors are brand names used by KeyBank National Association (KeyBank). Key Wealth and Key Private Client are also brand names used by Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor.
The Key Wealth Institute is comprised of financial professionals representing KeyBank National Association (KeyBank) and certain affiliates, such as Key Investment Services LLC (KIS) and KeyCorp Insurance Agency USA Inc. (KIA).
Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual author(s), and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates.
This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy.
KeyBank, nor its subsidiaries or affiliates, represent, warrant or guarantee that this material is accurate, complete or suitable for any purpose or any investor and it should not be used as a basis for investment or tax planning decisions. It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal or financial advice.
The summaries, prices, quotes and/or statistics contained herein have been obtained from sources believed to be reliable but are not necessarily complete and cannot be guaranteed. They are provided for informational purposes only and are not intended to replace any confirmations or statements. Past performance does not guarantee future results.
Brokerage and certain investment advisory services are offered through Key Investment Services LLC (KIS), member FINRA/SIPC and SEC-registered investment advisor. Insurance products are offered through KeyCorp Insurance Agency USA, Inc. (KIA) and underwritten by third party insurance carriers not affiliated with KIS. KIS and KIA are affiliates under the common control of KeyCorp. To learn more about KIS’s investment business, as well as our relationship with you, please review our KIS Disclosure page.
Check the background of KIS on FINRA's BrokerCheck.
Non-Deposit products are:
NOT FDIC INSURED • NOT BANK GUARANTEED • MAY LOSE VALUE • NOT A DEPOSIT • NOT INSURED BY ANY FEDERAL OR STATE GOVERNMENT AGENCY