After a tumultuous beginning of June for markets, investors hoping that a Federal Reserve (Fed) meeting and rate hike would calm markets were sorely disappointed last week.
The latest year-over-year Consumer Price Index (CPI) figures, a commonly used approximation of inflation, were released on Friday and the numbers came in higher than expected (see graph below).
Despite a big bounce on Friday, risk assets had another difficult week last week. The latest Consumer Price Index year-over-year increase was released on Wednesday.
It was another busy, and volatile, week in the markets. The US Federal Reserve (Fed) moved forward with the much anticipated 50-bps interest rate hike on Wednesday and equity markets immediately rallied on the news.
April was an abysmal month for most risk assets, with the S&P 500 index (large US companies) declining nearly 9 percent bringing year-to-date losses for the index to almost 13 percent.
Equity markets are once again in correction territory (defined a decline of 10% or more) with some parts of the market, such as technology stocks, officially in a bear market (a decline of 20% or more).
Both equity and fixed income markets continued their downward slide last week. The war in Ukraine continues to drag on, Covid-19 lockdowns in China persist, and Federal Reserve President Powell indicated that a 50-bps interest rate increase is “on the table” at the next meeting.