Market developments
Equities: The S&P 500 is on a seven-day winning streak and ended with its best week of the year. The market has been boosted by cooling inflation and better than expected retail sales in the U.S. The CBOE Volatility Index has dropped to 15, indicating improved risk sentiment. Additionally, the yen carry trade is regaining popularity among hedge funds, as investors seek higher returns by borrowing the Japanese currency.
Fixed income: Cooler inflation data raised hopes for interest-rate cuts from the Federal Reserve next month. Analysts from JPMorgan described the week’s economic data as supporting a “Goldilocks narrative”, suggesting a favourable economic environment. Fixed Income performance was muted this week and ended slightly positive in North America.
Commodities: Spot gold topped $2,500 an ounce for the first time this week, bolstered by expectations that the U.S. Federal Reserve is moving closer to cutting interest rates. Gold has gained more than 20% this year amid growing optimism over monetary easing and large purchases by central banks. The precious metal has also seen increased demand as a safe-haven asset due to rising geopolitical risks, including tensions in the Middle East and Russia’s conflict with Ukraine.