Investors Bought In May

Monthly Market Snapshot: May 2021


The old market adage of “Sell in May and Go Away,” did not happen. To the contrary, global equities actually rose 1.4% in the month. In the United States, the Dow Jones rallied 1.9% as cyclical shares rose while the NASDAQ slipped 1.5% as investors trimmed positions. The S&P 500 eked out a 0.5% gain. Europe outperformed with shares rising by 3.2% while Japanese shares climbed by 1.5%. The 10-year U.S. Treasury yield was largely unchanged during the month – falling from 1.63% to 1.59%. Fixed income returns were slightly positive for the month, but remain modestly negative year-to-date.

Investors remain focused on U.S. employment and inflation data as they attempt to determine the future path of Federal Reserve policy. The strength or weakness of the incoming data will likely determine the timing of the Fed’s decision to taper its asset purchases. The most likely timeframe remains late 2021 or early 2022. Labor market distortions are adding to the uncertainty.

After reducing its equity allocation slightly last month and taking other portfolio actions in anticipation of higher market volatility, Citi’s Global Investment Committee (GIC) left its asset allocation unchanged at its May 19 meeting. Our overweight to Global Equity and REITS remains at +8%. Fixed Income and Cash remains at -8%.