Chart #1 — 

April witnessed a challenging macro 


The Citi Economic Surprise Index took a deep dive this month, suggesting that more U.S. economic data is surprising on the downside. The PCE deflator increased unexpectedly to 2.7% in March (expected 2.5%), and core PCE remained at 2.8% (expected 2.7%), marking an increase for two consecutive months. Fed Chair Powell said there had been a “lack of further progress” on inflation this year. It will probably take longer to "regain confidence" on inflation.
U.S. Q1 GDP growth was disappointing at 1.6%, with personal spending growth slow at 2.5%, fueling concerns about stagflation where inflation is rising but growth is waning. Additionally, financial conditions showed slight tightening and liquidity diminished. 
Europe witnessed a less inflationary environment relative to the U.S. with Eurozone inflation in March remaining flat at 2.4% year on year, although the important services component contracted by 30bps to 3.7%.


Source: ZeroHedge, Bloomberg

Chart #2  — 

The market is once again delaying interest rate cuts

Over April, market sentiment about rate cuts this year kept decreasing, pricing out only 1.5 rate cuts for 2024 and delaying the timing of the first cut. Four months ago, there was only a 3% chance of no rate cuts this year, now prediction markets raised this likelihood to 36%. 
In Europe, expectations for rate cuts remain more positive due to lower inflation and stable but slow economic growth. The European Central Bank (ECB) is still expected to cut rates this summer.


Source: CME Group

Chart #3  — 

Bond yields on the rise

In a context where just one rate cut is priced this year and discussions of potential rate hikes, the U.S. 10-year note yield reached 4.73%, its highest since November 2023, standing approximately 100 basis points above its December low and the 2-year Treasury yields climbed 40 basis points to 5.0%. Global bond prices fell by 2.5%.


Source: J.P. Morgan

Chart #4 — 

A tough month for equities


The shift in market sentiment made April the first down month for equities since the Federal Reserve's pivot to October 2023. Developed market equities fell by 3.7%, the S&P 500 by 4.1% (its biggest monthly loss since September - see chart below), the Nasdaq and Dow by 3% and 4.37% respectively. The Magnificent 7 suffered their first monthly loss since October and their worst performance since September.
European equities outperformed US equities, buoyed by better-than-expected economic indicators. The eurozone's flash composite Purchasing Managers' Index (PMI) reached 51.4.
In Japan equities retreated, losing some of their gains of the past five months, as widening interest rate differentials between Japan and other developed countries heightened investor concerns about imported inflation and its impact on domestic demand.


Source: Barchart

Chart #5 — 

A mixed start for first-quarter corporate results





In April, major companies reported their Q1 earnings results. Overall, companies generally exceeded expectations this quarter, despite the low bar set against a supportive economic backdrop. Tesla (TSLA), Alphabet (GOOGL), Amazon (AMZN) and Microsoft (MSFT) reported positive results, while Meta Platforms (META) experienced setbacks.
The market, however, reacted more severely to disappointing earnings, as investors focused increasingly on whether recent increases in value were justified by earnings.


Source: BofA


Chart  #6 — 

The Japanese Yen is collapsing

The Japanese Yen has reached a significant low, weakening to 160 against the US Dollar for the first time since 1990. Despite rising inflationary expectations and a continuing devaluation, the Bank of Japan (BoJ) opted to keep its policy rate unchanged at 0%-0.1%, which is consistent with economists' expectations. This decision came as Tokyo's April core inflation rate registered at 1.6%, below the forecasted 2.2%. The BoJ faces a complex economic dilemma: managing excessive debt and inflationary pressures with accommodative monetary policies.


Source: Bloomberg

Chart #7 — 

Emerging markets are recovering

Emerging Market (EM) equities experienced a record inflow, receiving $20.8 billion in a single week, the largest amount in history. This surge in capital inflows contributed to overall positive returns for EM equities, which closed the month with a gain of 0.5%, and 2.8% YTD. Emerging market performance was also driven by the recovery of Chinese equities.


Source: J.P. Morgan

Chart #8 — 

The impact of geopolitical tensions on global commodities

The risk of escalation in the Middle East has led to a surge in commodity prices. The Bloomberg Commodities index rose by 2.7% in April, making it the best-performing asset class of the month. US oil futures surpassed $85 a barrel after tensions in the Middle East escalated, demand forecasts were revised upwards, and risks of supply disruption increased. Copper climbed around 14% to a two-year high of $10,000 per tonne. This surge was driven by fears that the world's copper mines would struggle to meet the next wave of demand from green industries. Major players in the sector, such as BlackRock and Trafigura, have predicted supply shortages unless copper prices rise. 
In addition, mining giant BHP Billiton has made a major move by proposing to buy Anglo American for USD 39 billion. If the merger goes through, BHP-Anglo could control 11% of the world's mined copper supply, according to Bloomberg.


Source: Bloomberg

Chart #9 — 

Gold as a safe haven

Against a backdrop of geopolitical uncertainty, gold played its role as a safe haven and inflation hedge. It reached record levels, topping $2,400 an ounce, before retreating. In addition, China's central bank has been actively accumulating gold, with the aim of diversifying its reserves away from the US dollar.


Source: FT

Chart #10 — 

Bitcoin ends its winning streak with April drop

In April, bitcoin marked a clear reversal of its recent positive trend, dropping 15% after seven consecutive months of gains. The decline in bitcoin's value coincided with a decrease in ETF flows into the cryptocurrency; net flows were negative in April at -$183 million, following substantial positive inflows in previous months: +$4.62 billion in March, +$6.03 billion in February, and +$1.47 billion in January.
The bitcoin fourth halving happened April 19, 2024. Given that only three halving’s have taken place in bitcoin's history, past performance cannot be considered statistically significant. However, historically, the halving usually had a very positive effect on the price of bitcoin, particularly in the 6 to 9 months following the day of halving.


Source: Bloomberg


This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document.

Read More

Straight from the Desk

Syz the moment

Live feeds, charts, breaking stories, all day long.

Thinking out loud

Sign up for our weekly email highlighting the most popular posts.

Follow us

Thinking out loud

Investing with intelligence

Our latest research, commentary and market outlooks