Market volatility remains elevated and the sought after ‘consolidation phase’ with more stable market dynamics in both the equity and fixed income sectors remains elusive. Risk assets performed well on Tuesday, post the constructive retail sales report, only to move lower on Wednesday as idiosyncratic news on the state of the consumer linked to the performance of big box retailers caused market angst.
Financial markets are experiencing heightened volatility and tighter conditions as central banks employ more restrictive monetary policies to combat persistent inflation. Risk assets have sold off and bond returns have been negatively impacted by the dramatic rise in rates.
Market volatility continued this week as investors absorbed new inflation data and the prospect of further rate hikes by the Federal Reserve in response. U.S. consumer price increases exceeded consensus forecasts in April, while moderating slightly from March. The Consumer Price Index (CPI) was up 8.3% year-over-year in April, higher than the 8.1% consensus estimate but down from 8.5% year-over-year in March.
