Weekly Commentary

May 10, 2024

Markets had a fairly positive week in the first full week of May trading, as a softer than expected jobs number last Friday, which caused traders to reassess the possibility of a rate cut by year end.? The more benign monetary policy backdrop was also bolstered by a rally in tech stocks, following a much stronger than expected revenue number from the world's largest chip maker, Taiwan-based TSMC, which announced its Q1 report Thursday evening NY time.? The combination of a less hawkish Fed and stronger earnings was definitely a significant catalyst for risk assets this week, and stocks in the US were near record highs following a dour month of April. In fact, the "old" economy-based Dow Jones posted its best winning streak of the year, even outperforming the S&P500, as cyclical names like Home Depot and Caterpillar drove the index upwards.

For its part, bonds yields eased, with the benchmark 10-year note yielding below 4.50% for the entirety of the week, although with a spat of volatility mixed in.? As we have signaled in early commentaries, the US fiscal situation is challenging to say?the least, and with supply abatement with no end in sight, yields are unlikely to return to pre-pandemic levels in the absence of a fiscal solution to the federal government's chronic deficit problem.

Commodity prices held steady this week, and there were no major movements in currencies.? Gold had a positive week on the possibility of fiscal easing, and crude oil is hovering around the $ 80 level.??

Heading into next week, all eyes will be focused on the CPI number for April set to be released, but the number will likely have little impact on the Fed's next FOMC meeting in June.? But with earnings season winding down, look for investors to pay special attention to macro factors doing into the summer months.??