Last week investors were focused on US inflation data and speeches from Federal Reserve officials. US stock performance was muted Monday-Wednesday while investors waited for the inflation data. In the event, Thursday’s release of the personal consumption expenditures price index, came in close to expectations and sparked a positive response from investors with stocks rallying strongly to end the week. The PCE data for January came in at a 2.8% annual rate showing that inflation is continuing to rise but is slowing.

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https://realmim.com/stocks-finish-the-week-on-a-high-after-us-inflation-data/

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This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

In a quiet week in terms of economic data releases, global stocks moved higher. The US small-cap Russell 2000 was a notable outlier (once again) and ended the week lower.

In the US, minutes from the Fed’s latest meeting were released. It seems that officials are still looking for more evidence that inflation is heading back to the target of 2% before they will be comfortable lowering rates. Stocks rallied anyway with investors focusing more on quarterly earnings which have, in the main, beaten expectations – strong earnings by Nvidia brought attention back on AI. Markets now see the odds of a first rate cut in June as a little above 50%.

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https://realmim.com/stocks-higher-last-week-with-focus-on-us-quarterly-earnings/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

In the US, inflation data was hotter than anticipated at 3.1% for January (2.9% forecasted). This caused a rethink of when the Fed might begin rate cuts. Stocks sold-off following the data but recovered, helped by UK CPI data which unexpectedly showed annual inflation held steady at 4% in January. Even with weaker-than-anticipated US retail sales data on Thursday, the majority of investors are now looking at a date beyond May for the first cut. With the US economy remaining strong some Fed officials have commented that there is no rush to lower rates just yet.

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https://realmim.com/markets-rethink-the-likely-date-that-fed-will-start-cutting-rates/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

UK inflation figures are due this week as well as all-important GDP data from the ONS. The UK economy shrank by 0.1% in the third quarter of 2023 and if, as expected, the fourth quarter shows a similar contraction, it would mean the UK tipped into a technical recession at the end of last year. The yield on the UK 10-year gilt ended last week above 4% and remains above that level today (Monday)

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https://realmim.com/uk-may-have-dipped-into-a-recession-last-year-data-will-tell-us-this-week/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

In the US The Fed kept interest rates on hold for the fourth month running with Chair Powell commenting that while it would be appropriate to lower rates at some point this year, it is unlikely that a cut will happen as soon as March. Markets are now pricing in less than a 20% chance of a March cut.

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https://realmim.com/us-jobs-surprise-reduces-chance-of-a-rate-cut-in-march/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Investors are generally optimistic going into 2024 and expect the Fed to cut rates as early as March but stocks came under pressure in a cautious first week of the year and the US 10yr Treasury yield climbed back above 4%.

Minutes from the December Federal Open Market Committee (FOMC) showed members agreeing to maintain a restrictive approach for now while expecting to cut rates before the end of the year.

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Stocks came under pressure last week and the US 10yr Treasury yield rose back above 4%

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Both equities and bonds have been rallying in November. Inflation pressures have been easing and investors are becoming increasingly confident that the US Federal Reserve and other central banks may be done with raising rates.

Last week’s better-than-expected US CPI data showed that core inflation had fallen to its lowest reading in more than two years – stocks rallied strongly and the 10-year Treasury Yield fell below 4.4% by the end of the week. There is growing anticipation among many market participants that the Fed will begin cutting rates by the middle of next year.

Full report:
https://realmim.com/stocks-and-bonds-both-rallying-this-month/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

The US Federal Reserve kept interest rates on hold last week for the second meeting in a row. Good news, even though the federal funds rate remains at a 22-year high. Comments from Fed Chairman Powell indicating that the market expectation of one more hike may no longer be accurate gave a boost to stocks which rallied sharply. However he did add that the committee had not yet discussed rate cuts and remains focused on whether further hikes will be needed.

Full report:
https://realmim.com/stocks-rally-after-interest-rates-are-held-steady/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Global stock markets were lower last week. Fears of escalation in the war in the Middle East, higher Treasury yields (the yield on the 10-yr US Treasury briefly rose above 5% for the first time in sixteen years) and mixed earnings reports from US mega-cap tech companies weighed on investor sentiment.

Full report
https://realmim.com/fed-and-bank-of-england-expected-to-keep-rates-on-hold-this-week/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Global stock markets were mixed last week but in the main tended to finish the week higher – a resilient performance considering recent events in the Middle East. Not surprisingly though Oil rallied strongly last week as did Gold and the US Dollar.

Despite the terrible situation developing between Israel and Hamas, investors continue to concentrate on interest rates as the main focus. Some Fed members commented last week that the recent jump in long-term rates may mean there is “less of a need to raise the Fed Funds Rate” – to quote Dallas Fed President Lorie Logan.

Full report
https://realmim.com/global-stock-markets-held-firm-despite-recent-events/

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’