Weekly Market Update

Week in review

Markets extended their rally last week, with both the S&P 500 and NASDAQ closing at fresh all‑time highs despite a relatively quiet macro backdrop. Markets started the week cautiously amid renewed Middle East tensions that pushed oil prices higher, briefly weighing on risk sentiment. By Tuesday, uncertainty around the Iran ceasefire and rising energy prices pressured equities, even as economic data surprised to the upside. Core retail sales posted a strong gain in March that was well above expectations, supporting firmer Q1 consumption momentum. Business inventories rebounded slightly more than expected and pending home sales also beat expectations. By midweek, stocks stabilized ahead of the next phase of earnings and macro data. By Thursday and Friday, stronger-than-expected PMI data, stable jobless claims, and a solid earnings backdrop helped equities push higher once again. That said, consumer sentiment remains near multi‑year lows with inflation expectations moving higher, highlighting an ongoing disconnect between household confidence and market performance.

Spotlight

Earlier this year, we published a market bulletin highlighting why the Fed’s independence matters. Last week brought new developments as Kevin Warsh appeared before Congress for his Fed Chair confirmation hearing. The tone was more about credibility and independence than near‑term rate decisions. Warsh emphasized that monetary policy must remain strictly independent and stated that he made no rate‑cut commitments to the White House. At the same time, he argued that independence is not automatically compromised simply because elected officials express opinions. From a policy perspective, Warsh kept his “regime change” framework front and center, signaling a desire to change the Fed’s analytical frameworks, tighten communications, and reduce reliance on tools like QE and heavy forward guidance. He also ruled out firing regional Fed presidents, removing a meaningful tail‑risk for markets. Overall, the hearing eased some immediate fears, but uncertainty remains around how quickly any broader policy pivots could realistically take place.

Sources

Authors: