The S&P 500 penciled in its 11th gain out of 12 sessions yesterday, reaching an all-time high of 7,051, along with the Nasdaq 100 printing its 12th consecutive gain to refresh a record high of 26,400 – a run I believe we have not seen in nearly a decade. Netflix (NFLX) earnings also landed yesterday after the closing bell. While headline numbers came in strong, the company’s Q2 26 forward guidance did the damage, sending the stock down nearly 10%.
In the commodities complex, Brent is testing space just south of the widely watched US$100/barrel, following a rebound from a low of US$94 on Wednesday, while WTI has just elbowed south of US$90. Gold, meanwhile, held near record territory at US$4,793, buoyed by expectations that any durable peace deal would open the door to Fed rate cuts further down the line.
In the fixed-income space, US Treasury yields bear steepened, with the benchmark 10-year yield rising for a second consecutive session to 4.317%. I think most of this is down to inflation concerns; however, while price pressures are undoubtedly a key driver, growth fears also remain a worry, which tends to be negative for yields.
Macro: ECB Minutes and Upcoming Fed Speak
The ECB minutes made the airwaves on Thursday, reaffirming pretty much what we already know: despite money markets discounting at least two rate hikes this year, President Lagarde and Co are not in any rush to move just yet. Nevertheless, the minutes did show that the central bank is focused on upside inflation risks, while also closely watching downside risks to growth.
April’s policy meeting has been largely priced for a no-change decision, while June could very well be in play. However, this would be conditional on inflation jumping higher, particularly on the core front. For now, I am still bullish the EUR and bearish the USD.
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