Signia Invest Insights | May 2024
Market Review and Outlook
Markets recovered their April losses in May, with the S&P 500 rising 4.8% and the STOXX 600 rising 2.6%, both climbing to new record highs. That came as US inflation eased slightly from its pace in Q1, which added to hopes that a prolonged ‘Goldilocks’ environment was still intact; that is, one where economic growth and inflation are neither too hot to force central banks into a more restrictive policy stance, nor too cold to raise the economic alarm over a recession.
Consequently, the weaker inflation data coupled with some weaker-than-expected economic data in the US, caused the US Dollar to fall against most of its major peers. Moreover, the geopolitical situation was also calmer, which helped Brent crude oil prices to consolidate in May after four consecutive monthly gains.
Nevertheless, even as risk assets did well for the most part, markets struggled again towards the end of the month. That came as global inflation data proved stickier than expected, leading to a fresh pullback for sovereign bonds across several major countries and yield curves. Indeed, there was a significant milestone in Japan, as the Japanese 10-year government bond yield closed above 1% for the first time since 2012, marking a potential exit from financial depression after 12 long years for domestic savers.
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