Stocks stay bearish even after “less hawkish” Fed

Intermediate

Macroeconomic/ geopolitical developments

  • A 0.5% hike by the Fed as expected, but Jerome Powell stated that a hike of 0.75% was “not something we are actively considering.”
Jerome Powell
  • Stock indices initially rallied strongly on this information Wednesday, then reversed these gains and more on Thursday and Friday.
  • Friday’s US Jobs reports saw 428K jobs added in April, slightly above consensus of around 390K, but the prior months’ gains were revised lower by almost the same gap (39K).
  • US 10yr yields broke up through the psychological 3% barrier.
  • The Bank of England (BoE) hike rates by 25 basis points to 1% on Thursday as expected, but has delayed quantative tightening, so a slightly dovish hike.
Bank of England
  • Pandemic lockdowns in China continue to weigh on domestic growth potential and increase global supply chain and inflation worries.

Global financial market developments

  • Growth/ tech stocks lead US stock averages lower again, in some instances to new 2022 lows.
  • Global stock averages were also lower last week, although European and UK indices are still outperforming their US counterparts.
  • US 10yr yields broke up through the psychosocial 3% barrier as US and global bonds move to new high yields.
10 Yr Yield
  • US Dollar strength has stalled slightly, through the greenback stays strong across the board.
  • Gold sold off further, staying more negative.
Gold chart
  • Oil moved still higher, reinforcing a positive range environment.
Oil chart
  • Copper plunged still lower for a still more negative tone.
Copper chart

Key this week

  • Geopolitical focus:
    • Victory Day in Russia, watching for comments from Putin
    • Still closely monitoring the war in Ukraine
  • Central Bank Watch: A light week for Central Banks, we just get the Bank of Japan (BoJ) Meeting Minutes on Monday  
  • Macroeconomic data: A light week for data, but some big standouts with release Wednesday of the Chinese, German, and US CPI data.
DateKey Macroeconomic Events
09/05/22BoJ Meeting Minutes; Victory Day in Russia
10/05/22German ZEW Survey
11/05/22China CPI; German CPI; US CPI
12/05/22UK GDP, Industrial and Manufacturing Production; US PPI
13/05/22US Michigan Consumer Sentiment Index
Nasdaq
DAX
DXY

Editor in chief

Steve Miley is the Market Chartist and has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued

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