In The Spotlight
In The Spotlight
In The Spotlight
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Corporate fundamentals remained resilient through the first quarter, with a majority of S&P 500 companies having reported earnings. Earnings surprises to the upside exceeded the long-term average, while surprises to the downside have been less common than the long-term average. We think corporate earnings strength can stay strong amid a volatile equity market, with companies most able to pass on higher costs best positioned.
Global equities moved lower last week, most notably in the US. A greater-than-expected US CPI print weighed on investor sentiment, with volatility amplified by a weak technical backdrop. Ultimately, the S&P 500 closed down –2.35%. In the UK, equities moved higher, despite disappointing GDP data, with the FTSE 100 ultimately finishing up 0.45%. Read More
Oil price volatility continued as concerns about economic growth and diminishing demand offset weak output data. On the supply-side, OPEC+’s crude output fell for the second consecutive month, missing their targets by 2.6 mb/d. Still, WTI and Brent closed at $110.49/bbl and $111.55/bbl, respectively. Gold also fell -3.99%, struggling to break through recent ranges, despite broader risk-off sentiment that has historically been supportive. Read More
Global sovereign yields ticked lower last week as investors searched for safety amid a continuing equity market selloff. In the US, the 10-Year Treasury yield fell back below the 3.0% threshold following the April inflation print. The release may have led to greater market pricing of an economic slowdown and a subsequent desire to rotate into government debt. In all, the 10-Year Treasury yield ended -19 bps lower at 2.93%. The 10-Year German Bund yield also ended lower at 0.95% as the ECB suggested a forthcoming yet gradual hiking path. Read More
The US dollar appreciated 1.02% last week against a basket of currencies, with continued acceleration in the Fed’s expected tightening timeline. In fact, last week the EUR/USD cross touched $1.03, the lowest level since 2016. Ultimately, it ended the week at $1.0404, down -1.36%. Read More
US CPI increased by 8.3% YoY in April, lower than its peak the month prior, but above expectations of 8.1%. The decrease in price pressures was largely driven by transportation categories, though still experiencing well above trend levels. On the other hand, the breadth of inflation, especially in services categories, remains a concern for policymakers. In China, the impact of lockdowns on inflation was mixed. Headline CPI accelerated 2.1% YoY in April, while core CPI dropped to 0.9% YoY, a ten-month low, due to weak domestic demand. Going forward, consumer price inflation is likely to remain benign as COVID-19 cases recede and food price pressures ease. Read More
US Initial Jobless Claims marginally rose for the week ending May 7, up 1k from the week prior to 203k. In line with pre-pandemic levels, the relatively low level is a sign that labor markets remain tight. Read More
The University of Michigan Consumer Sentiment Index printed at 59.1 in May, below last month’s reading of 65.2. Softening consumer sentiment has reflected higher inflation and lower asset prices. Read More
The first estimate of Q1 UK GDP showed a 0.8% increase from the fourth quarter, below consensus of 1.0%. Gains in household consumption and investment were partially offset by softer government spending and net exports. Yet, March monthly GDP indicated a contraction of 0.1% MoM as higher inflation weighed on consumer demand, suggesting a softening growth outlook. Read More
For US Fixed Income, Government, Corporate, and High Yield refer to the Bloomberg US Treasury, the Bloomberg US Corporate Credit, and the Bloomberg US High Yield indices, respectively. For European Fixed Income, Government, Corporate, and High Yield refer to the Bloomberg Euro Treasury Index, the Bloomberg Euro Corporate Index, and the Bloomberg Euro High Yield Index, respectively. Short, Intermediate, and Long refer to the Short, Intermediate, and Long segments of their respective curves. Quality returns refers to the credit quality of asset classes ranging from Government, highest quality, to High Yield, lowest quality. Since August 24, 2016, the Barclays indices are co-branded “Bloomberg Barclays indices”.
Japan GDP QoQ (Cons: -0.4%, Prior: 1.1%)
Euro Area GDP YoY (Cons: 5.0%, Prior: 5.0%)
UK CPI YoY (Cons: 9.1%, Prior: 7.0%)
Euro Area CPI YoY (Cons: 7.5%, Prior: 7.4%)
US Initial Jobless Claims (Cons: 200k, Prior: 203k)
Japan New Core CPI YoY (Cons: 0.7%, Prior: -0.7%)
“Japan GDP QoQ” refers to Japan’s Gross Domestic Product growth for Q1, quarter-over-quarter. “Euro Area GDP YoY” refers to the Euro Area’s Gross Domestic Product growth for Q1, year-over-year. “UK CPI YoY” refers to the United Kingdom’s Consumer Price Index, year-over-year. “Euro Area CPI YoY” refers to the Euro Area’s Consumer Price Index, year-over-year. “Japan New Core CPI” refers to Japan’s Consumer Price Index (ex- Fresh Food, Energy), year-over-year. “US Initial Jobless Claims” refers to the number of people filing to receive unemployment insurance benefits for the week ending May 14. “FOMC” refers to Federal Open Market Committee. “BoE” refer to Bank of England.“ “BoJ” refers to Bank of Japan.
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