Market Overview|Quilter Cheviot

Markets digest key events

Our weekly market overview from Quilter Cheviot

By Alan McIntosh, Chief Investment Strategist

Global equity and bond markets finished last week little changed despite a series of keenly anticipated macroeconomic events and the release of a sizable proportion of first quarter earnings updates. The MSCI All Country World Index declined by 0.3% and the yield on 10-year government bonds in the UK, US and Europe all closed within a few basis points of where they began the week.

In the US, the two main events – the Federal Reserve interest rate decision and monthly non-farm payrolls – painted a mixed picture as dovish hints from chair Jay Powell were counteracted by another stronger than expected set of employment figures. In the press conference shortly after it was announced that the US benchmark rate would be increased to 5.25%, its highest level since 2007, Powell seemed to suggest that the central bank may be done raising rates. “We feel like we’re getting close, or maybe even there,” said Powell.

The comments caused bond yields to move lower in response, although the move was largely retraced before the weekend after the latest US labour market report showed 253k jobs were added in April. The headline increase was partially offset by downward revisions to previous months but, overall, the data revealed next to nothing showing any signs of weakness. The unemployment rate fell further to a cycle low of 3.4% while higher than forecast wage data would not have been seen as a welcome development for rate setters still concerned about rising price pressures…

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