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The Fed remains cautious, wanting more data before deciding on a rate cut, while newly released US CPI data provided relief for the markets and the rise of Rassemblement National result in snap elections in France. Each week, the Syz investment team takes you through the last seven days in seven charts.

Last week could have wreaked havoc on the U.S. bond market with CPI/PPI data and the Fed's decisions, but inflationary pressures are easing and the job market appears to be normalizing—a perfect mix for bond performance. However, Europe's outlook is darkening with a snap election in France.



The major US equity indexes ended mostly higher for the week, with the S&P 500 Index and Nasdaq Composite touching new highs. The market’s advance remained exceptionally narrow for the 2nd consecutive week, however, with an equally weighted version of the S&P 500 trailing its more familiar, capitalization-weighted counterpart by 2.15%. The AI euphoria continues to provide a continuing tailwind to tech-related stocks and growth shares, which outpaced value stocks by the largest margin since March 2023 (461 basis points). Another factor behind growth shares’ outperformance may have been reassuring inflation data and falling bond yields. US headline CPI inflation was flat in May for the first time in nearly two years.

The past couple of weeks have brought useful insights about the US economy. And although pockets of weakness, risks and uncertainties remain, while the Presidential election looms, the general situation today appears to be quite good for the world’s largest economy. Business activity remains clearly positive, inflation has resumed a slowing trend after a short-lived unexpected pickup, and the Fed has clear room for easing its monetary policy if needed but has no need to rush neither. The scenario of a smooth, soft landing, where inflation would gently converge toward the Fed target, growth would gently converge toward its long-term potential, and the Fed would eventually gently loosen its monetary policy toward a neutral stance, no longer appears to be a pipe dream.



• Political and fiscal uncertainty: the Rassemblement National's (RN) gains in the European elections introduce political and fiscal uncertainty into France's fixed income market. Key risks include potential policy shifts towards increased public spending, undermined investor confidence, and heightened market volatility. • Market reactions: immediate market reactions have already seen selloffs in bonds, with increased yields on French government bonds (OATs) and a steepened yield curve. Foreign investors are particularly concerned about capital outflows and the broader economic implications within the Eurozone. • Credit rating downgrade: the recent S&P downgrade highlights the need for careful monitoring of France's credit rating and its impacts on the fixed income market. • Future risks: if the RN performs similarly in the upcoming legislative elections, the risk to France's bonds could intensify, driven by potential shifts in fiscal policy and sustained political uncertainty



The US job market shows mixed signals, the ECB cuts rates and Nvidia overtakes Apple's market cap! Each week, the Syz investment team takes you through the last seven days in seven charts.

As the ECB and BoC initiate rate reductions of 25 basis points, contrasting sharply with the U.S.'s robust job market and steady rates, the world turns its eyes to the upcoming FOMC meeting to gauge the potential implications of this growing transatlantic policy divergence.



The S&P 500 and Nasdaq Composite indices both reached record intraday highs during the week while small & mid caps pulled back. Growth stocks outpaced value shares by the widest amount since early in the year on the back of falling longer-term interest rates. The start of the week brought some downbeat economic readings (e.g ISM manufacturing below 50.0), which appeared to lead to a return of worries about “stagflation” among some investors. The picture brightened at midweek as the ISM’s services jumped to 53.8 in May, its highest level in nine months. The upside surprise in the official US jobs report on Friday morning didn’t lead to a negative market's reaction as it was tempered by an unexpected rise in the unemployment rate to 4.0%, its highest level since January 2022.

After months of speculations, this week could mark the start of the long-awaited global rate cut cycle across developed economies. (...)



Economic shift: US slows, Europe rises, Asia mixed As mid-2024 nears, the US economy shows signs of moderation, Europe gradually recovers, and Asia sees mixed performance with strong Chinese exports and a stabilising outlook in Japan despite a weak yen. Nvidia continues to live up to the hype, GameStop trading mania is back and in a surprising move, the U.S. SEC approved eight applications for spot Ethereum ETFs. Each month, the Syz investment team takes you through the last month in ten charts.

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