It was an abnormally quiet week in the world of finance, with no significant news releases. Markets were up slightly, not due to any news but more of a follow-through on last week’s performance. Given the lack of new announcements and all the focus on next Wednesday’s CPI release, we will do something different this week. We’ll share some of our favorite charts we’ve come across over the last few weeks that highlight various trends in the financial world. We hope you enjoy it.
Inflation is still high but moving in the right direction.
The Fed Funds rate has increased dramatically to combat inflation. Make sure your savings accounts are keeping up.
With higher rates, U.S. interest payments on our national debt have surpassed $1.0 trillion.
Also, with higher rates, the housing market has seen elevated prices on low supply as no one wants to move. The cost of an average mortgage payment has skyrocketed.
Recent data has shown that the jobs market is starting to slow down (see downtrend in Nonfarm payrolls).
How does the market continue to stay resilient? One is that the market is forward-looking. See forward earnings estimates.
Two, annual stock buybacks are expected to eclipse $1.0 trillion in 2025, buoying the market.
We hope you enjoyed the change of pace this week. We’ll be back next week with some in-depth commentary on the most recent CPI report.
Economy
- Markets moved slightly upward during what was an abnormally slow news week. The S&P 500 was up 1.9%, the Nasdaq was up 1.1%, and the small-cap Russell 2000 was up 1.2%.
- U.S. unemployment claims surged by 22K to 231K on the week ending May 4, the highest since August 2023, and sharply above market expectations of 210K.
Stocks
- U.S. equities were in positive territory. Utilities and Financials were the top performers, while Consumer Discretionary and Energy lagged. Value stocks led growth stocks, and large caps beat small caps.
- International equities closed higher for the week. Developed markets fared better than emerging markets.
Bonds
- The 10-year Treasury bond yield was flat for the week, staying at 4.50%.
- U.S. bond markets were in positive territory this week, while International bond markets were negative.
- Government bonds led for the week, followed by corporate bonds and high-yield bonds.
