Market conditions are currently strewn with macroeconomic and geopolitical challenges. Since the beginning of the year, the major equity market indexes have faced substantial selling pressure on investors’ concerns about aggressive interest rate increases by the Federal Reserve to tame multi-decade-high inflation, supply disruptions arising from the Ukraine-Russia war, rising energy and commodity prices, and the possibility of a recession.
The U.S. consumer price index moderated to 8.3% in April after advancing 8.5% in March, its highest level in 40 years. Economists believe the May CPI will be flat to April. The May jobs report released last week has all but put paid to expectations of a pause in the Fed’s monetary policy tightening. Citi Personal Wealth Management’s Head of the investment strategy Shawn Snyder said of the May jobs report, “It’s telling us the economy is in fairly good shape, which is good news, but when viewed in the context of what it means for the Federal Reserve and tightening monetary policy, it likely makes them more confident they can continue to tighten. That comes through as a bit of a negative for investors because they are hoping for the Fed to pause later this year.”
