So far in Q1, 68% of S&P 500 companies reporting earnings beat estimates by more than one standard deviation, much higher than the 46% historical average. However, beats have only been rewarded by a median 26bps of outperformance, versus 103bps historically. The market has been more focused on future guidance as we move towards economic normalization.
US stock markets rallied last week amid a robust corporate earnings season, strong economic data releases, and continued vaccination progress. The S&P 500 ended 0.04% higher, surging past 4200 to set a new record high and largest monthly gain since November. Meanwhile, the FTSE 100 rose by 0.50% and the Euro Stoxx 600 notched its third consecutive month of gains as continued loosening COVID-19 restrictions drove consumer spending, boosting Q1 corporate profits and economic recovery. Read More
Oil prices climbed to a six-week high as inelastic short-term supply and bullish forecasts of recovering demand provided a macro tailwind. We expect oil demand in the next six months will reach 5.2 million barrels per day, the biggest jump on record. WTI and Brent crude prices rose to $63.58 and $67.25 per barrel, respectively. Read More
Global rates largely rose last week as strong economic data and the prospect of additional fiscal stimulus prompted investors to sell off government debt in favor of riskier assets. The 10-Year US Treasury yield climbed 7 basis points (bps) to 1.63%, even after the Federal Reserve’s latest meeting maintained its monthly pace of asset purchases at $120 billion. In Europe, a pick up in vaccinations sent the 10-Year German Bund yield 6 bps higher to -0.20%. The 10-Year UK Gilt yield rose to 0.84% as investors await the upcoming Bank of England meeting. Read More
The US dollar index rose 0.23% last week, driven in part by positive spending, income, and manufacturing data. Signs of economic recovery outside of the US also helped push other currencies higher against the greenback, with the euro and sterling edging higher to $1.2022 and $1.3810, respectively. Read More
Euro area inflation is expected to edge higher in April’s final read with the CPI flash estimate rising 1.6% YoY, up from 1.3% in March. This jump in prices was primarily due to higher energy costs (10.3% YoY in April compared to 4.3% in March). Read More
Euro area unemployment stood at 8.1% in March, beating consensus expectations of 8.3%, resuming its decline after being flat for 3 months as vaccination campaigns pick up speed and restrictions ease. Read More
US Q1 GDP grew by 6.4%, driven by the stimulus, accelerated vaccine distribution, pent-up savings, and economic reopening. As daily COVID-19 cases have been declining, lockdown restrictions have eased resulting in a boost of personal consumption, real estate investment and government spending. The Euro area economy contracted by -0.6% QoQ in the first quarter of 2021 mainly driven by Germany which posted a QoQ GDP growth of -1.7%. Read More
Initial jobless claims declined to the lowest level since the beginning of the COVID-19 pandemic, falling to 553k for the week ending April 24. Read More
For style performance, Large, Mid, and Small for US Equity refer to the Russell 1000, Russell Midcap, and Russell 2000 indices, respectively. Value refers to companies with lower price-to-book ratios and lower expected growth values, and Growth refers to higher price-to-book ratios and higher forecasted growth values. For US Fixed Income, Government, Corporate, and High Yield refer to the Barclays Treasury, Barclays Corporate Credit, and Barclays High Yield indices, respectively. Short, Intermediate, and Long refer to the Short, Intermediate, and Long segments of their respective curves. For European Fixed Income, Government, Corporate, and High Yield refer to the Barclays Euro Treasury Index, the Barclays Euro Corporate Index, and the Barclays Euro High Yield Index, respectively. Quality returns refers to the credit quality of asset classes ranging from Government, highest quality, to High Yield, lowest quality.
HK Q1 GDP (Cons: 0.7%; Prior: 0.2%)
UK Manuf. PMI (Cons: 60.7; Prior: 60.7)
US Jobless Claims (Cons: 540k; Prior: 553k)
US Unempl. Rate (Cons: 5.7%; Prior: 6.0%)
"HK Q1 GDP” refers to Hong Kong’s first quarter gross domestic product (QoQ). “US Jobless Claims” refers to the number of people filing to receive unemployment insurance benefits for the week ending April 24. “UK Manuf. PMI” refers to United Kingdom Manufacturing PMI. “US Unempl. Rate” refers to the US Unemployment Rate.
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