U.S. and International Equities
Markets Finish Lower
Amid another volatile week for the markets, the U.S. major market indexes finished lower for the sixth straight week. This hasn’t happened since 2011. Many investors remain concerned over inflation’s potential impact to the economy, corporate profits and stock valuations given the April Consumer Price Index report data released this week. International equities, per the MSCI EAFE and the MSCI EM indexes, lost ground. The MSCI EM was the biggest laggard as concerns over the Chinese economic outlook grew with COVID-19 lockdowns continuing and the U.S. dollar staging a sharp rally.
Fixed Income Mixed
The Bloomberg Aggregate Bond Index finished higher this week as bonds finally caught a bid in the face of steep equity market declines with the 10 year U.S treasury bond yield falling back after hitting its highest level since 2018 early in the week. Some investors are now anticipating softer economic conditions given the Fed’s hawkish stance on monetary policy. High-yield corporate bonds, as tracked by the Bloomberg High Yield index, finished lower for the week continuing their downward trajectory for 2022.
Commodities Mostly Lower
Reversing recent course, both crude oil and natural gas prices finished breakeven this week amid the release of international fuel stockpiles. The major metal prices for gold, silver, and copper continued to lose ground for the third consecutive week with silver off over 10% for the week. All three major metals are lower for 2022.
Economic Weekly Roundup
April inflation increased marginally higher than analysts expected. Prices in April rose 0.3% from a month ago as well as over 8% from a year ago. In addition, prices in some of the service sectors spiked. This being said, overall, we believe that inflation has likely peaked, as base effects pushed the year-over-year metrics down in April relative to March.
Small Business Challenges
The National Federation of Independent Business (NFIB) April Small Business Index continue to show that many of the same challenges that have affected small businesses for over a year have not dissipated. Both inflation as well as labor shortages continue to weigh heavily on short-term expectations. Almost 50% of small business owners are reporting job openings that cannot be filled. Roughly one third of businesses across the country are increasing capital expenditures, a positive sign for economic growth later this year.
Weekly Employment Report
Initial claims for unemployment insurance for the week ending April 30 came in above last week’s total as well as economists’ expectations but remain historically low. In addition, continuing claims declined from the prior week and came in below economists’ estimates. Continuing claims continue to reach record lows, declining to levels not seen since 1970. The data continues to illustrate a very tight labor market.
The following economic data is slated to be released during the week ahead:
- Tuesday: April Retail Sales, Capacity Utilization, Industrial and Manufacturing Production, March Business Inventories, May NAHB Housing Market Index
- Wednesday: April Building Permits and Housing Starts
- Thursday: Weekly Initial and Continuing Claims, April Existing Home Sales and Leading Indicators
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