Macro Market Movers

How much do interest rates matter for EM equity investors? Over short-term periods, like what we are experiencing now, rising interest rates tend to cause higher volatility for emerging market (EM) stocks.

As our LPL Chart of the Day shows, European economic data reached a noteworthy low on May 7, after Citi’s Economic Surprise Index for the Eurozone dipped beneath -100 for the first time since 2011.

Economic growth forecasts tracking above 3%. With half of the second quarter now in the rearview, consensus forecasts are tracking to 3.1% gross domestic product growth for this quarter.

Oil has been on the rise since last June, when prices hit an interim low of about $42.50 before crossing $70 for the first time since 2014 on May 8.

The impact of a 3% 10-year yield. The 10-year Treasury yield continues to hover near 3%, but we feel this level is more important psychologically than it is for the bottom line of investors or borrowers.

Widespread gains helped drive the S&P 500 Index back into positive territory on the year, though interest-rate sensitive sectors like utilities and telecommunications lagged the broad market.

The S&P 500 Index closed at its highest level since March 16 yesterday and is now up 1.85% for the year. But, what’s the significance?

New highs for small caps. The S&P 600 Index closed at a new all-time high yesterday, while the S&P Microcap Index was just pennies away.

Inflation is in the headlines again after the April Consumer Price Index (CPI) accelerated, while the Producer Price Index (PPI) fell versus March readings.

U.S. equities move into the year-to-date lead. The S&P 500 Index has returned 1.5% year to date, moving ahead of the MSCI EAFE Index’s 0.9% return and the modest 0.7% loss for the MSCI Emerging Markets (EM) Index.