'Sell in May and go away" is an old market saying that is likely to ring true this year. Several risk factors have emerged, such as small US banks facing deposit outflows and central banks continuing to raise their interest rates amid stubbornly high inflation.
As well, the CDX, an index of credit default swaps that gauges US debt default risk, soared to a record high last week after a Republican congressional proposal to cut government spending in exchange for raising the debt ceiling passed the House of Representatives.
Recent economic numbers have been mixed but indicate more risks. For example, preliminary purchasing managers' index (PMI) readings for developed countries from S&P Global showed business activity in the US rose at its fastest pace in nearly a year in April, driven by the service sector. The European Flash Composite PMI has also recovered, but the manufacturing sector has continued to contract.
