(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• It was a strong session for investors in U.S. equities, and the TSX was the only index that lost value.  For the fourth consecutive week the NASDAQ bested the other major equity indexes.  The gain of more than 3% in one week for the NASDAQ was nearly double the performance of the S&P 500, and well beyond the respectable, yet small, increase of the Dow. 
• On Tuesday the latest consumer inflation data was released by StatsCan.  In April the Consumer Price Index (CPI) rose 4.4% on a year-over-year basis, just slightly above the same figure for March, which was 4.3%.  On a monthly basis prices increased by 0.7% in April, above March’s one-month inflation of 0.5%.  Gasoline, groceries, rent, and mortgage interest were the largest contributors. 
• The debt ceiling negotiations continue in the U.S. without resolution.  President Biden has warned, “I can’t guarantee that they (Republicans) will not force a default by doing something outrageous”.  Republicans would like significant reductions in government expenditures in exchange for an increase in the borrowing limit.  Growing sentiment is that neither side will be able to escape blame should a default occur.  The deadline to avoid a cash shortfall is approaching quickly, and President Biden and House Leader McCarthy had an in-person meeting scheduled for 5:30 pm on Monday.  Honouring its debts by avoiding a default is necessary for the American, North American, and global economies. 

Source: StatsCan CPI Release, Debt Ceiling Discussion, U.S. Debt Ceiling Standoff

What’s ahead for this week?

• In Canada, after Monday’s celebration of Victoria Day, when markets were closed, another light week for economic announcements will occur with wholesale and manufacturing sales, the federal government’s budget balance and the raw materials price index scheduled for release.
• In the U.S., building permits, pending home sales, new home sales, durable goods orders, Gross Domestic Product, and April’s Personal Consumption Expenditures (PCE) will be reported before Memorial Day is observed on May 29th.  Also, the meeting minutes from the Federal Reserve’s latest interest rate announcement on May 3rd will be published.
• Globally, Eurozone consumer confidence, manufacturing and services Purchasing Managers Indexes, and a European Central Bank (ECB) meeting are scheduled.  The Bank of Japan will release its inflation indicator and the Bank of China will announce its prime rate.

Source: Federal Reserve’s Meeting Minutes

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