Asset Management Weekly Market Commentary

Market updates for the week ending
May 3, 2024

Key observations

• The FOMC meeting provided investors in both stocks and bonds with something to like. Equity investors cheered the Committee chair’s less hawkish message and, if history is any guide, stocks tend to do quite well when the FOMC is ‘on pause’ as it should be into mid-year. Fixed income investors took comfort in knowing that the Fed’s balance sheet will shrink at a more gradual pace starting in June and the fact that the Fed appears to be a willing buyer as the U.S. Treasury issues larger quantities of longer-term bonds starting in 3Q. The ‘Fed put’ appears to be back which should prevent yields on long-term Treasuries from running away to the upside.
• With the FOMC meeting now in the rearview mirror, investors can turn their attention back to earnings season which has, on balance, been cause for optimism and a constructive outlook on stocks. The S&P 500 remains range bound and stuck between its 50-day and 100-day moving averages, and catalysts to break higher or lower out of that range may be difficult to identify until Nvidia, a member of the ‘Magnificent 7’ posts quarterly results on May 22.

What we're watching

• The U.S. Treasury is scheduled to auction off $42B of 10-year bonds on Wednesday. We will be closely watching what percentage of the offering is taken down by indirect bidders, primarily central banks abroad, as well as how much of the issue the dealer community is forced to inventory as a gauge on the current demand environment for long-term U.S. Treasury debt.
• China reports import and export data for April on Thursday. Imports are expected to rise 1.2% year over year after falling 1.9% year over year in March. Exports are expected to rise 3.0% year over year after falling 7.5% year over year in March.
• The University of Michigan Consumer Sentiment index for May is released Friday with a 76.0 reading expected, which would be a modest drop from 77.2 in April.
• The April Nonfarm Payrolls report is released Friday with the consensus estimate calling for 205k jobs to have been created during the month. Average hourly earnings are expected to grow 0.3% month over month and 4.1% year over year, which would fall in-line with March readings.