A look back
- The S&P 500 rose 1.0% to post its 11th gain in the past 12 weeks. Technology stocks led and Energy was the worst performing sector. Small caps outperformed in the U.S. while international developed markets posted more modest gains.
- The yield curve flattened as the 2-year yield climbed 0.11% on Wednesday before ending the week at 4.17%, its highest close since February 2025. The 10-year yield moved modestly lower to 4.45%.
- The Federal Reserve (Fed) held rates steady but signaled a higher likelihood for rate hikes on the horizon. Elsewhere, the U.S. and Iran signed a Memorandum of Understanding, allowing the Strait of Hormuz to temporarily open.
A look ahead
- Investors will keep a close eye on developments in the Middle East after the Strait of Hormuz was closed over the weekend, threatening the tenuous peace agreement between the U.S. and Iran.
- The economic highlights will be Core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation gauge, as well as the final Q1 GDP estimate. Following the hawkish tone of last week’s Fed meeting, markets are pricing in a 36% chance of a rate hike in July as of Monday morning.
- Economic releases: Existing Home Sales, Q1 GDP, Durable Goods Orders, Core PCE, U. of Michigan Consumer Sentiment.
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