Asset Management Weekly Market Commentary

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Domestic stocks were slow out of the gate but finished the week with gains as participation was broad based. The ‘Magnificent 7’ lagged the S&P 500 by a meaningful margin on the week, evidence of sector rotation under the surface, an encouraging trend should it persist.
Eurozone and U.K. stocks continue to perform well, and further upside is possible as an improving economic outlook and more accommodative monetary policies could draw investors seeking relative value into these long-forgotten pockets of the equity market.
Treasury yields bounced around in a narrow trading range due to a push vs. pull from economic data releases, but most closed out the week little changed, presenting investors with a ‘clip your coupon’ kind of week.
Corporate bond issuance has picked up meaningfully, but credit spreads have barely moved, evidence that even after the recent drop in Treasury yields there continues to be plenty of capital willing to accept credit risk, even if lower yields mean less compensation for doing so. This is a positive sign of investor risk appetite.

U.S. Producer Price Index (PPI) for April is released Tuesday which is expected to have risen 0.3% month over month and 2.2% year over year, which would be 0.1% above the readings from March. Wholesale price increases, as measured by the PPI, flow into consumer prices and should factor into the Consumer Price Index (CPI) and Personal Consumption Expenditure (PCE) over subsequent months, so market participants will be looking to PPI as an indicator of where consumer prices might be going in the coming months.
U.S. Consumer Price Index (CPI) for April is released Wednesday and the headline reading is expected to rise 0.4% month over month and 3.4% year over year vs. 0.40% and 3.5% readings from March. Core CPI, which excludes volatile food and energy prices, is expected to rise 0.3% month over month and 3.6% year over year, vs. 0.4% and 3.8% readings in March.
U.S. Retail Sales for April are released Wednesday with the headline reading expected to show 0.4% growth month over month. This release is worth watching as a read on the state of the U.S. consumer and their willingness and ability to spend, which is crucial given consumption accounts for over 60% of U.S. GDP.
Eurozone Industrial Production (IP) for March is released Wednesday and is expected to fall 0.4% month over month, well below 0.8% growth in the prior month.