H.G Markets :

Wall Street investors brushed off mixed economic data, driving up stocks and bonds ahead of a pivotal inflation report shaping the Federal Reserve’s next moves. Despite technology losses, the S&P 500 hit a new high, and a drop in retail sales eased worries about overheated consumer demand after recent inflation concerns. Bonds showed modest shifts, with Fed swaps indicating a June rate cut. The dollar weakened.

Amid conflicting economic narratives, progress in lowering inflation suggests potential Fed interest rate cuts, while the economy’s outperformance provides flexibility to delay. The S&P 500 rebounded to approximately 5,030, erasing weekly losses, with gains in banks and energy, and a notable 6% climb for Tesla Inc. Applied Materials Inc. capped the day with a bullish revenue forecast. 10-year Treasury yields retreated to 4.23%.

Citigroup strategists, led by Scott Chronert, maintain a year-end S&P 500 target of 5,100, advocating overweight positions in tech and suggesting adding cyclical exposure through industrial and financial shares. Despite a relentless equities rally, Lisa Shalett at Morgan Stanley Wealth Management anticipates potential liquidity concerns later this year.

The recent high consumer price index stirred markets, triggering adjustments in bets on Fed rate cuts in 2024. Attention now turns to Friday’s producer price index, expected to impact short-term directions for equity and bond markets. Notably, strong demand for Treasury options targeting 10-year yields exceeding 4.4% underscores lingering inflation concerns, reminiscent of levels last seen in November.