--- title: 10 stories to remember description: "A mixed bag for markets in May \n\nMay saw First Republic Bank fail, another rate hike in the US and Europe and commodities hit a 2 year low. However, the job market remained resilient, an agreement was found to prevent a US debt default and AI mania propelled tech stocks even higher. 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If you made a mistake, please change here USA Country Switzerland Canada: Other than Ontario, Quebec, Alberta Canada: Ontario, Quebec or Alberta USA Other country Language Language English French German Italian I confirm Legal information 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. ### 10 stories to remember A mixed bag for markets in May May saw First Republic Bank fail, another rate hike in the US and Europe and commodities hit a 2 year low. However, the job market remained resilient, an agreement was found to prevent a US debt default and AI mania propelled tech stocks even higher. Each month, the Syz investment team takes you through the last month in ten charts. [![Charles-Henry Monchau, CFA, CMT, CAIA](https://blog.syzgroup.com/hubfs/charles-2.jpg)](https://blog.syzgroup.com/fast-food-for-thought/author/charles-henry-monchau) [**Charles-Henry Monchau, CFA, CMT, CAIA**](https://blog.syzgroup.com/fast-food-for-thought/author/charles-henry-monchau) Chief Investment Officer **Monday, 06/05/2023** | - ![Pdf](https://blog.syzgroup.com/hubfs/pdf%20(1).png) - - - - #### Story #1 — ##### Another bank failure in the United  States; bank lending at a standstill   In the United States, regional banks continue to experience major customer withdrawals, while money market funds are recording record inflows. A new bankruptcy occurred in May, this time involving First Republic Bank, one of the largest regional banks. However, 3 months after the SVB failure, deposits are stabilizing on an aggregate basis. On the other hand, growth in bank lending is at a standstill, which should soon weigh on activity.  ![pic 1-Jun-05-2023-02-53-25-1416-PM](https://blog.syzgroup.com/hs-fs/hubfs/pic%201-Jun-05-2023-02-53-25-1416-PM.jpg?width=900&height=551&name=pic%201-Jun-05-2023-02-53-25-1416-PM.jpg) ```   ``` ``` Source: Robin Brooks ```   ```   ```   --- #### Story #2 — ## The job market remains resilient The divergence between services and manufacturing intensified in May. Purchasing managers' opinion surveys (PMIs) for service activities in the US reached their highest level in 13 months (55.1), while these same surveys are also above the 55 level (expansion) in the eurozone and the UK. This positive momentum is underpinned by a buoyant labor market, with unemployment rates at or close to record lows in the eurozone (6.5%), the UK (3.9%) and the US (3.4%), accompanied by rising wages.    Conversely, the manufacturing sector is facing a serious slowdown. The same opinion surveys (PMI) reached 44.6 in May in the Eurozone, their lowest level in 3 years. Manufacturing PMIs are below 50 in the United States and the United Kingdom.  Note that inflation remains high in both the US and Europe, leaving the market to anticipate a potential further rate hike (see point #3).  ![pic 2-Jun-05-2023-02-54-47-5203-PM](https://blog.syzgroup.com/hs-fs/hubfs/pic%202-Jun-05-2023-02-54-47-5203-PM.jpg?width=900&height=471&name=pic%202-Jun-05-2023-02-54-47-5203-PM.jpg) **Source: Bloomberg** --- #### Story #3 — ## Another rate hike by the Fed and the ECB in May  Both the US Federal Reserve and the European Central Bank raised their key interest rates by 25 basis points in May. According to the Fed's Executive Committee, we can expect a pause of a few months. A few weeks ago, the market was anticipating a total of 3 rate cuts in the second half of the year. The US yield curve is now forecasting a rate hike in July (before 1 or 2 rate cuts later in the year). ![pic 3-Jun-05-2023-02-58-14-5030-PM](https://blog.syzgroup.com/hs-fs/hubfs/pic%203-Jun-05-2023-02-58-14-5030-PM.jpg?width=900&height=382&name=pic%203-Jun-05-2023-02-58-14-5030-PM.jpg) Source: Bloomberg --- #### Story #4 — ## US debt ceiling negotiations In the United States, the impasse in negotiations between Democrats and Republicans over the debt ceiling has dominated the headlines in recent weeks. At the time of writing, an agreement has been reached between the US President and representatives of the House of Representatives. As a result, CDS on US debt are stabilizing. ![pic 4-Jun-05-2023-02-59-50-1043-PM](https://blog.syzgroup.com/hs-fs/hubfs/pic%204-Jun-05-2023-02-59-50-1043-PM.jpg?width=900&height=541&name=pic%204-Jun-05-2023-02-59-50-1043-PM.jpg) Source:  Bloomberg --- #### Story #5 — ## AI-mania propels Nvidia and technology stocks higher Large-cap technology stocks (e.g. GAFAs) with exposure to the theme of Artificial In-telligence have attracted investor interest in recent weeks. The FANG+ index (the broa-der GAFAs) rose by 17.2% over the month, and the Nasdaq benefited from this, pos-ting a monthly gain of 5.9% (the Nasdaq is now up 24.1% year-to-date). Nvidia is un-doubtedly the most emblematic stock of the AI bubble, with a gain of 40% in May, enabling it to join the exclusive club of capitalizations in excess of $1 trillion. Europe is also benefiting from this trend, with an 8.1% gain for the StoxxTechnology index. ![pic 5-Jun-05-2023-03-01-23-7982-PM](https://blog.syzgroup.com/hs-fs/hubfs/pic%205-Jun-05-2023-03-01-23-7982-PM.jpg?width=299&height=351&name=pic%205-Jun-05-2023-03-01-23-7982-PM.jpg) Source:  Visual Capitalist --- #### Story #6 — ## Global equities fall in May Although there were a few notable exceptions, such as technology stocks, it was not a buoyant month for global equities. The MSCI World Index was down 0.9% in May, and in the U.S., the S&P 500 was up just 0.4%. The equi-weighted version of the S&P 500 fell by 3.8%, reflecting the sharp divergence in performance between technology mega-caps and the rest of the market. Some regions recorded significant losses: Europe's STOXX 600 fell by 2.3%, while the Hang Seng dropped by 7.9%. In the U.S., the Nasdaq was the only major stock market index to end May with a gain (up 8%), while the Dow Jones underperformed significantly (down around 4%).  Energy stocks were the most disappointing performers in May (-9.8%), while technology stocks posted the biggest gains (+9.5%).  ![pic 6-Jun-05-2023-03-02-44-1901-PM](https://blog.syzgroup.com/hs-fs/hubfs/pic%206-Jun-05-2023-03-02-44-1901-PM.jpg?width=900&height=539&name=pic%206-Jun-05-2023-03-02-44-1901-PM.jpg) Source:  Bloomberg --- #### Story #7 — ## The come-back of the US dollar A readjustment of market expectations regarding the next direction of key interest rates (potentially a hike in July) saw investors flock back to the greenback. It was the best-performing G10 currency in May, gaining 2.6%.  ![pic 7-Jun-05-2023-03-06-44-6564-PM](https://blog.syzgroup.com/hs-fs/hubfs/pic%207-Jun-05-2023-03-06-44-6564-PM.jpg?width=900&height=537&name=pic%207-Jun-05-2023-03-06-44-6564-PM.jpg) Source:  Bloomberg --- #### Story #8 — ## Sovereign bonds struggle US Treasuries fell by 1.2% in May. UK Treasuries fell even more sharply, by 3.8%. In Europe, the performance of sovereign bonds was more mixed, with a slight advance over the period (+0.5%). The resilience of inflation on both sides of the Atlantic partly explains the disappointing performance of sovereign bonds.      --- #### Story #9 — ## Commodities hit two-year lows The Bloomberg Commodity Spot Index was down 6% in May, reaching its lowest level since August 2021. Price declines were seen in the energy, metals and agricultural products sectors. For example, the price of Brent crude  oil (-8.6%) fell for the fifth consecutive month, closing at $72.66 a barrel. Gold closed the month below the $2,000 mark. The decline in industrial metals was also marked during the period under review; a disappointing upturn in activity in China partly explains this poor performance.  ![pic 9-2](https://blog.syzgroup.com/hs-fs/hubfs/pic%209-2.jpg?width=900&height=536&name=pic%209-2.jpg) Source: Bloomberg --- #### Story #10 — ## Strong performance by Greek assets The Greek elections led to a significant outperformance of Greek assets in May, with the general index of the Athens Stock Exchange up 12.4% over the period (note that this asset is still almost 80% lower than these). Greek sovereign bonds also outperformed, and the spread between 10-year yields and German bunds narrowed by 38 basis points to 150 basis points at the end of May. ![pic 10-2](https://blog.syzgroup.com/hs-fs/hubfs/pic%2010-2.jpg?width=900&height=489&name=pic%2010-2.jpg) Source: Bloomberg --- #### Disclaimer 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. 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