Asset Management Weekly Market Commentary

Market updates for the week ending April 19, 2024

Key observations

  • Domestic equities faced selling pressure yet again as higher interest rates and geopolitical tensions put equities on high alert early in the week with large cap growth and technology stocks taking the worst.
  • Bond markets wavered for the third consecutive week, the longest slide since October, with yields rising across the curve as CPI carry over effects were emphasized by Fed speak that added insult to injury, leaving the market to grapple with ongoing delays in monetary policy easing.
  • Riskier credit assets experienced wider option-adjusted spreads (OAS) by the most in a week since January and before that October, but indicators of market health like steady issuance and low concessions looks more like profit-taking behavior than panic selling.

What we're watching

  • U.S. Purchasing Managers Index (PMI) for April is released Tuesday with a 52 Composite reading expected, which would be a fall from 52.1 in March. Manufacturing PMI is expected to improve to 52.8 from 51.9 in March, while Services PMI is expected to fall modestly to 51.5 from 51.7. A reading above 50 indicates expansion, while below 50 indicates contraction.
  • Eurozone Purchasing Managers Index (PMI) Composite for April is also set for release Tuesday with a 50.8 reading expected, which would be a modest uptick from the 50.3 reading in March. Manufacturing PMI is expected to rise to 46.5 from 46.1 the prior month, while Services PMI is expected to rise to 51.8 from 51.5 in March.
  • March Core PCE Deflator, the FOMC’s preferred inflation gauge, is released Friday with the headline reading expected to rise 0.36% month over month and 2.7% year over year, which would be modestly higher readings relative to February. Core PCE, which is viewed as more impactful for the purposes of setting monetary policy, is expected to rise 0.30% month over month versus 0.26% in February, and 2.8% year over year, which would be in-line with the prior month’s reading.
  • First Read on Q1 GDP comes out on Thursday, with the expectation that GDP annualized quarter over quarter decline to 2.3% from the prior quarter print at 3.4%. Growth expectations continue to grind higher since the start of the year, setting a high bar for the US economy that still seems well within reach.