A Mixed May

Monthly Market Snapshot: May 31, 2022

Highlights

After a rough start, both equities and bonds performed a bit better towards the end of May. The MSCI AC World Index, a broad measure of global stocks, finished the month a touch higher – up 0.1% in May. In the United States, the NASDAQ added 2.1% while the S&P 500 and Dow Jones were essentially flat. While far from a stellar performance, a leveling off may suggest that much of the recent equity market sell-off is behind us. Global fixed income returns were mixed, but the FTSE U.S. Broad Investment Grade Bond (USBIG) Index returned 0.5% during the month – the first positive monthly return since November 2021. This likely reflects a shift in a focus away from inflation and towards slowing growth. Commentary from the Federal Reserve will remain extremely important as investors try to decipher just how far the Fed is willing to go to fight inflation.

Our global equity overweight is focused in commodity hedges like natural resources, oil field services, and other defensive equities. Away from commodities, Citi Global Wealth Investments’ (CGWI) Global Investment Committee prefers companies with a solid track record of earnings and dividend growth (like consumer staples). We also believe that investors may wish to consider adding long-duration Treasuries (such as the 30-year U.S. Treasury) with yields likely to peak in 2022. We think that this type of defensive portfolio tilt has potential in the current environment.