Weekly house view | Increased confidence

Weekly house view | Increased confidence

The CIO's view of the week ahead.

The week in review

Comments from central banks were again an important part of the market backdrop last week. Fed chairman Powell Jerome Powell said that it was “not far” from gaining the confidence needed to cut rates and his ECB counterpart Christine Lagarde hinted at easing in June. Data from the February US nonfarm payrolls report were complicated but seemed to solidify the case for mid-year rate cuts. Yet profit taking meant the S&P 500 declined slightly last week (-0.2%[i] in USD). Of note was the late-week correction in the price of the most high-profile AI chipmaker. Greater certainty on the timing of the first rate cuts helped bond markets, with yields dropping across the curve in Europe and the US. Japanese stocks rose even though the yen rallied against the US dollar Whereas the US dollar suffered more generally on intimations of Fed rate cuts, the decline in real US rates meant that gold extended its rally to reach all-time highs.


After Super Tuesday, the 2024 US election looks set for a repeat of the 2020 Trump/Biden race. Geopolitical tensions are a growing factor in this year’s race and fiscal policy is likely to be expansionary post-election, whoever wins.

Key data

US nonfarm payrolls rose 275,000 in February, while job gains for the previous two months were revised down by 167,000. The jobless rate rose to 3.9% in February from 3.7% in January, while average hourly wages slowed to 4.3% from 4.5%. The ISM purchasing managers’ index for services fell to 52.6 in February from 53.4 in January is still above the 50 market that separates expansion from contraction for the 14th consecutive month. Chinese trade data improved markedly in January and February, with exports rising by 7.1% over the two months compared with a year earlier and imports up 31.5%. Both figures were ahead of consensus expectations. Industrial production in Germany picked up more than expected in January, rising 1% over the previous month compared with a 2% decline in December. However, January industrial production was still 5.5% lower than a year before and January factory orders declined 11.5% from December.

[i] Source: Pictet WM AA&MR, Thomson Reuters. Past performance, S&P 500 Composite (net 12-month return in USD): 2019, 31.5%; 2020, 18.4%; 2021, 28.7%; 2022, -18.1%; 2023, 26.3%.
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