Market Notebook

by | Apr 14, 2024

Discussion – 

Equity prices, as measured by ticker SPY, and bond prices, as measured by ticker BND, closed lower on the week.

SPY appears established in an upward trend while BND price action suggests consolidation.

Sentiment remains bullish for U.S. equities, with short-term volatility being dominated by market participant expectations for the start of rate cuts by the Federal Reserve.

Economic indicators within the Market Notebook paint a picture of mostly normal economic conditions, with inflation slowly coming under control.

Equity prices appeared to come under pressure last week because of economic data suggesting inflation is not falling as quickly as expected. To market participants, this raises the possibility of delayed rate cuts by the Federal Reserve.

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.

Although indicators suggest fundamentals are improving, 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.