Nasdaq 100 Leads Surge in Stocks

The Nasdaq 100 climbed by more than 4% last week, and the DJIA has slightly increased by 0.7%. The S&P 500 also increased by 2.7%. The US Commerce Department shared a report stating that the core personal consumption expenditures index, which excludes food and energy, went up by 3.7% in the first quarter. This increase was higher than anticipated and much higher than the 1.7% increase in the previous quarter.

The STOXX Europe 600 Index jumped by 1.7%. Business activity in the United Kingdom increased at the quickest rate in nearly a year. The composite PMI, a measure of business performance, rose from 52.8 in March to 54. While the costs of materials and resources went up at the fastest rate in 11 months, the prices for the goods and services produced by businesses actually decreased. This indicates that there is a decline in demand, which is putting pressure on the profitability of businesses.

The CSI300 Index saw an increase of 1.2%. Chinese banks kept the one-year and five-year loan prime rates steady at 3.45% and 3.95%respectively. This decision followed the People's Bank of China's decision to keep its medium-term lending rate unchanged the previous week. Some analysts suggest that policymakers are becoming more cautious about implementing further monetary easing measures. This caution is reflected in the central bank withdrawing cash from the banking system for the second consecutive month in April.

CHART OF THE WEEK

US Bonds: Longest and Deepest Drawdown on Record

In our view, there's insufficient headlines surrounding the bond market bubble explosion from end of 2020.

The Bloomberg US Aggregate Bond index, a prominent gauge of the investment-grade, US dollar-denominated, fixed-rate taxable bond market, is experiencing its most prolonged and profound drawdown on record. At its lowest, the drawdown hit -17%, persisting for 45 months now. The worst is that assuming other factors remain constant, it's projected that the index will require at least an additional 31 months to recover from its losses! The next longest drawdown lasted only 16 months, occurring from July 1980 to October 1981, with a -9% print.

The year-to-date performance remains lackluster, showing a -3.2% downturn while US equities are up 7%, as measured by the S&P 500 index.

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