Market Notebook
Discussion –
PRICE ACTION:
Equity prices, as measured by ticker SPY, and bond prices, as measured by ticker BND, closed higher during the last week.
SPY +1.65%
BND +0.60%
TECHNICAL ANALYSIS:
SPY price appears to have established an upward trend, while BND price action suggests wide-ranging consolidation.
SENTIMENT:
Sentiment remains generally positive for equities.
LEADING ECONOMIC INDEX:
The Conference Board Leading Economic Index® (LEI) for the U.S. decreased by 0.6 percent in April 2024 to 101.8 (2016=100), after decreasing by 0.3 percent in March.
“Another decline in the U.S. LEI confirms that softer economic conditions lay ahead,” said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board.
The latest press release states, “…While the LEI’s six-month and annual growth rates no longer signal a forthcoming recession, they still point to serious headwinds to growth ahead.”
ECONOMY AND FUNDAMENTALS:
Economic indicators within the Market Notebook remain mixed. The 10-year minus 3-month yield curve and the Conference Board’s Leading Economic Index signal caution, while the remaining indicators indicate normal conditions.
Throughout the tightening cycle, jobless claims have never indicated recession by our measure. In fact, jobless claims suggest that “normal” market conditions will likely continue over the short term.
It is worth noting that market participants should be on the lookout for recessionary conditions following the first rate cut after a tightening cycle. It seems likely that the first rate cut will happen in late 2024 or early 2025. To avoid recessionary conditions, the Federal Reserve will have to get the timing of rate cuts exactly correct. Thus far, the Federal Reserve has managed the economic cycle well.
All the best during the week ahead!
Disclaimer: Nothing in this discussion should be considered investment advice. The content of this discussion is strictly my personal opinion and subject to change at a moment’s notice. Investment advice can only be provided to you by your investment professional and not by a general market discussion such as this one. If you wish to speak with an investment advisor, contact us. We can probably help.