Charles-Henry Monchau

Chief Investment Officer



WEEKLY SUMMARY: Best week since the end of March for the S&P 500

US main equity index continues a rally that began with only a few interruptions in late May. The S&P 500 Index notched its longest stretch of daily gains since November 2021 and its best weekly performance since the end of March. Indeed, several signs emerged that the economy is enjoying a “Goldilocks” expansion of continued growth alongside falling inflation. On Tuesday, US May CPI numbers print was 4.0%, down from the prior month’s 4.9% and the slowest pace since March 2021. On Thursday, the Labor Department revealed that producer prices had declined 0.3% in May, marking four declines over the past six months. Investors also received some good news on the consumer side of the economy as retail sales rose 0.3% for the month and 1.6% over the past 12 months, marking the first y-o-y increase since January. Thus might have helped investors absorb a somewhat hawkish outlook from Fed policymakers. While the Fed kept rates unchanged, the “dot plot” suggested that this was more of a “skip” than a durable “pause” in their rate-hiking schedule, as the median rate projection suggested two more quarter-point hikes by the end of the year. In Europe, the Stoxx 600 advanced by 1.5% while the 10-year German government bond yield climbed above 2.5% after the ECB raised interest rates and signalled more tightening was likely. Japan’s Nikkei 225 Index rose 4.5% to their highest levels in over three decades, supported by the BoJ’s decision to leave its ultra-loose monetary policy unchanged.


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