Equity markets remain in limbo, treasury yields rose last week.

US equity markets finished the week where they began, on low trading volumes. One gets the sense that no one trusts the rally, which may encourage further upside. The FTSE 100 also reflects this, as it finished roughly where it started the week. The dollar slide against other currencies may have halted last week; however, US treasuries were out of favour again as yields rose across the board. The Vix index finished the week back down close to its historic average, indicating investors are either getting more cofident of further upside or complacent to the risks.

Last week’s US trade deal announcement with the UK made good headlines for Starmer, but the details reveal the deal was somewhat of a rush job, described by one commentator as more of a framework than a deal. Over the weekend, comments were made about progress being made with China. Trump suggests that he wants and expects tariffs on China to decrease, but currently, he proposes a tariff rate of 80%, which will still significantly impact global trade. The past few days’ events have raised hopes that Trump and the administration will retract many of his Liberation Day tariff announcements. This may be the case, but the data in the coming weeks may provide better insight into the damage done to the economy.

This week, the main event will be the release of the April Consumer Price Index, which is expected to show that US inflation remained steady at 2.4%. If that is the case, it may well give rise to further hopes of a cut in US interest rates in June. Retail sales data for April will be published on Thursday; there has been much evidence of weakness in consumer confidence, and this report could provide further insights into consumer spending trends. At the end of the week, we get the preliminary readings from the Michigan survey for consumer sentiment and inflation expectations. This week, the UK will release considerable economic data, including the monthly GDP report, industrial and manufacturing production, and business investment. 

Equity markets are starting the week on a quiet note, continuing to decide which way to go next as the S&P 500 continues to bump up against resistance levels. It’s probably worth watching the bond market this week; a further sell-off in yields will not support stocks going higher.