SPXV - May 2024 Monthly

2024-05-04 11:10:00 ET

Summary

• The US economy's resilience and stickiness of price pressures have led to a reassessment of Fed policy, causing a rise in US interest rates and a stronger dollar.
• Concerns about US fiscal policy and the stronger dollar have heightened among countries in the Asia Pacific region.
• Europe's lack of fiscal support has resulted in stagnant economies and lower inflation, allowing the European Central Bank and other central banks to cut interest rates before the US.

The resilience of the US economy and stickiness of price pressures spurred a reassessment of the trajectory of Fed policy. This sparked a sharp rise in US interest rates and extended the dollar’s advance. The somewhat disappointing April jobs report and a softer CPI report in the middle of May could signal that the interest rate adjustment is over. Federal Reserve Chair Powell played down the likelihood of the need to lift rates again, and as it was in Q4 23, when CPI moderated to a 2% annualized rate, the central bank is being prudent in both directions....

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