Markets trade in range on signs of U.S. growth slowdown
Markets consolidated in May and continued to process the strength of the economic recovery, a decline in global COVID19 cases, and the potential for inflation. Global stock markets were essentially flat, while bond indices rose as investors looked past historically high inflation readings and instead focused on disappointing employment data.
Markets are currently in a holding pattern as they await direction from incoming economic data. Investors are positioned for a reflationary environment but due to a near-term peak in U.S. growth momentum, they may be evaluating the possibility of stagflation in the short-term. There have been positive surprises in European and Japanese economic data, and we believe those countries are positioned to benefit from improving economic sentiment and increased vaccination rates.