Mixed Messages

Weekly Market Update | June 6, 2022

Highlights

The global equity market pulled back a bit with the MSCI World Index falling 0.6% as investors digested negative corporate commentary. In the United States, the tech-heavy NASDAQ slipped 1.0% as U.S. Treasury yields moved higher as growth metrics showed economic resilience. The S&P 500 lost 1.2% while the Dow Jones retreated 0.6%. Though it is worth noting that the S&P 500 is now 5.3% higher than its May 19th low. The nominal 10-year U.S. Treasury yield surged 19-basis-points from 2.74% to 2.93% by week-end.

Recent market commentary from corporate leaders likely tell us less about the future and more about today. It is natural to look to notable leaders for guidance, but the complexity of today’s backdrop suggests that it will probably be “time that tells” and not one or two charismatic Chief Executive Officers. The reality is that post-pandemic supply and demand must rebalance and that will take time.

The S&P 500 may have bottomed on May 19th, but we still think it’s too early to take an aggressive risk-on stance with positive economic data acting as a double-edged sword that greenlights the Fed to continue upon its path of tighter monetary policy. We will feel more comfortable about the prospects of a soft landing if the Fed eventually adopts a more patient stance heading into 2023.