Swissquote Bank: Data from the US gave a final punch to the bulls

Swissquote Bank: Data from the US gave a final punch to the bulls

May 24, 2024

Outlook
Bull stier (Rachel Claire, Pexels)

End in sight of the market bull run? Fed ponders hiking the rates.

‘The week hasn’t been pleasant for the market bulls,’ looks Swissquote Bank back. ‘On Wednesday, the FOMC minutes showed the disturbing truth that ‘many’ Fed members wondered whether keeping the rates ‘high for longer’ was sufficiently restrictive to tame inflation, and if hiking the rates wouldn’t be a better idea.

Then, the UK PM Sunak announced a general election beginning of July – way earlier than many expected – abating the slightest glimmer of hope to see the Bank of England cut its rates in June. Meanwhile, the latest British CPI data came in hotter-than-expected, anyway, warning that the policy easing wouldn’t necessarily be on the pipeline for June.

Across the Channel, the data released this week showed that wage growth in the euro area  increased 4.7% in Q1 – a red flag for officials who have been banking on a slowdown to keep inflation in check.

And finally, a set of too-strong-to-be-pleasant data from the US gave a final punch to the bulls. The US services PMI accelerated way faster than expected in May, according to the S&P’s preliminary PMI data, manufacturing activity also improved, while jobless claims came in soft. The US 2-year yield – which captures the rate expectations – advanced to 4.95%, the 10-year gilt yield reached 4.25%, the 10-year Bund yield hit 2.60%, the S&P500 and Nasdaq sold off from a record, the Stoxx 600 managed to eke out a small gain, but the FTSE 100 is down by more than 1.50% since last week’s peak, hit by a decent decline in energy prices as well.’

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