HIGHLIGHTS
US equities rebounded as geopolitical tension eased over last weekend. Market participants shifted their attention to earnings this week. Treasury yields jumped again. All eyes are on the FOMC meeting in the coming week.
First Cut: Markets expect the first cut in Eurozone and the US in June and November respectively. The 12-month inflation forecast in the eurozone continues to stay at the lowest point in 2 years.
Yen: Market is expecting a possible intervention of the yen after the Bank of Japan kept the rate remains unchanged. Yen dropped lower to 34-year low. USDJPY went up 2% this week.
Treasury: US treasury yield hit new high in 2024 due to the picked-up inflation. Despite the slowing down economy, the sell-off in treasuries deepened. Discussion around stagflation started again.
MARKETS
15,927.90 | +4.23% | |
S&P 500 | 5,099.96 | +2.67% |
Dow | 38,239.66 | +0.67% |
10-Year | 4.67% | +2bps |
Brent | 89.50 | +2.64% |
DXY | 106.09 | -0.03% |
*Data as of market close. 5-day change ending on Friday.
VIEW FROM THE STREET
Equity
Goldman Sachs: A basket of tech and AI names went up 12% this week due to favorable earnings. China-based tech firms outperformed among broader strength in China equities.
UBS: The optimism in tech is helping to offset the worries from macroeconomics. Big tech names like Microsoft and Alphabet topped expectations of their earnings and revenues.
Fixed Income
Blackrock: Due to the retreat in banks, private credit is expected to gain more lending shares and offer attractive returns relative to public credit risk.
Standard Chartered: We are bullish on INR-denominated bonds. GDP growth and trade deficit are stronger than expected in India. We expect the Indian Rupee (INR) to stay rangebound in the coming 12 months and will be the lowest volatility among emerging market peers. Thus, risk-reward looks attractive.
Economy
Barclays: Fed meeting in the coming week is expected to be hawkish because of the strength in economic growth and sticky inflation. China's economy showed weaknesses in consumption and decline in property transactions.
Goldman Sachs: US core PCE increased from the previous month, raising the price pressures. GDP in Q1 is surprisingly lower than the expectation (1.6% actual vs 2.5% expected).
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DISCLOSURE
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