Hello, this is Tom Jalics, Chief Investment Strategist at Fifth Third Bank
US equities were mostly lower in a holiday shortened week, with the S&P 500 and Nasdaq Composite finishing lower after three weeks of gains. For the week, the Dow Jones Industrial Average rose 0.7%, the S&P 500 was down 0.1%, and the Nasdaq Composite ended the week 1.1% lower. U.S. Treasury yields moved modestly lower last week with the 10-year U.S. Treasury note ending the week at 3.39% and the 2-year U.S. Treasury note ending the week at 3.98%. The 2-year/10-year U.S. Treasury yield curve remained inverted, finishing the week 59 basis points inverted. The U.S. dollar index recorded its fourth consecutive weekly drop, and its fifth decline in the past six weeks, ending the week down 0.6% versus a basket of global currencies. Gold was 2.0% higher, rising for a sixth consecutive week, ending the week at $2,007.91/ounce. West Texas Intermediate (WTI) crude oil rose 6.6% for the week, ending the week at $80.70/barrel, following the OPEC+ group’s surprise output cut last weekend.
Last week's key economic report was the March nonfarm payrolls report which was released on Friday. U.S. government bond prices fell Friday, pushing yields higher, after the latest jobs numbers suggested that there remains substantial demand for workers despite some recent signs of a weakening economy. The yield on the benchmark 10-year U.S. Treasury note finished the week at 3.39%. The Labor Department reported that the U.S. economy added 236,000 jobs last month, matching economists’ expectations. The unemployment rate fell to 3.5% from 3.6%, while average hourly earnings for workers matched expectations by rising 0.3% from the previous month. After the jobs report, interest-rate futures were projecting a roughly 70% chance that the Fed will raise interest rates by 0.25% at its next meeting in May, according to CME Group data. That was up from a roughly 50% chance of an 0.25% interest rate increase at the May Fed meeting on Thursday prior to the jobs report.
This week's big economic release is the March CPI inflation report, which will be announced on Wednesday. Investors expects a slight headline inflation softening to a 0.35% monthly increase from February's 0.4% monthly rise, with a similar easing for core prices (to 0.4% monthly from 0.5% in the prior month). Additional releases include the March PPI inflation report on Thursday as well as preliminary University of Michigan consumer sentiment index. On Friday, the Census Bureau will report on March retail sales, providing a key update on consumer spending. There are few Fed speakers on the calendar, but the Federal Reserve will release meeting minutes from its most recent policy meeting on Wednesday. Additionally, the nternational Monetary Fund and World Bank will hold their 2023 spring meetings in Washington D.C. starting Monday, giving updates on the prospects for global economic growth. Earnings season kicks off this week with reports from big banks and financial institutions, including JPMorgan Chase, Wells Fargo, Citigroup, BlackRock, and PNC Financial Services. Investors will also digest earnings releases from Progressive Insurance, Delta Air Lines, and UnitedHealth Group, among others.
As always, we will be watching and reporting to you next week. Thank you.