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Each month, senior leaders of Hancock Whitney's Asset Management team discuss the latest news and events that impact markets and the economy.
This month: Equity markets and bond indices ticked slightly upward in May as the Federal Reserve continues to employ rate hikes to cool inflation.
Watch and listen to the webinar:
Key Takeaways:
- After almost two months in a row of weekly declines for stocks, the last full week of May produced sizeable gains across all equity indices moving equities into positive territory for the month of May.
- Most bond indices also produced modestly positive results as yields climbed modestly as inflation concerns ebbed amid cooling U.S. economic growth. It was the first positive month for bonds since November 2021.
- The Federal Reserve policy committee, as expected, raised their target rate by +50 basis points at their May 4 meeting. The minutes of the meeting provided some additional color around the Fed’s policy intentions. The minutes reinforced the likelihood of 50-basis-point hikes occurring at the upcoming June and July meetings. However, the minutes also noted that “many” members felt front loading Fed policy with multiple 50-basis-point rate hikes could leave room for policy “adjustments” in the fall of 2022.
- Market expectations for 2Q22 Real GDP Q/Q annual rate growth inched up during May, with recent updates to the Bloomberg Survey on average rising from 3.0% to 3.5%, and several updates towards the end of the month averaging 3.8%. In the same survey, market expectations for the core PCE deflator (a measure of inflation used by the Fed), excluding food and energy prices, edged down for 2Q22 from 5.0% to 4.8% in recent weeks, with projections showing a glide lower to 4.0% by year-end.
- The Russia / Ukraine situation continues to pressure energy prices as supply chain issues linger. The West is struggling to find appropriate solutions as inflation continues to plague the consumer.
- Democrats continue to pursue passing parts of the failed Build Back Better legislation. As the midterms get closer, the passage of any major legislative items becomes less likely.
The Hancock Whitney Asset Management team is ready to help guide your portfolio through the ongoing market uncertainty. Let our expert team help you achieve your investment goals.
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