Market developments
Equities: The S&P 500 has retraced about one-third of its gains made post-election as optimism around corporate growth under Trump diminishes. Investors are now more cautious about potential budget deficits and inflationary pressures linked to Trump’s policies. Vaccine stocks faced pressure due to concerns over health policy direction under Trump’s administration. The broader market sentiment reflected unease about economic conditions and cabinet appointments affecting investor confidence.
Fixed income: Powell’s remarks highlighted ongoing economic growth and persistent inflation above the Fed’s 2% target, leading to increased Treasury yields and reduced expectations for a December rate cut, now estimated at less than 60% probability compared to 80% the previous week.
Commodities: Gold prices have recently declined to near a two-month low, primarily due to shifting expectations regarding Federal Reserve interest rate cuts. Following comments from Fed Chair Jerome Powell, who emphasized the resilience of the U.S. economy, traders have reduced their forecasts for a rate cut in December. This has led to an increase in U.S. bond yields, which typically negatively impacts gold prices.