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Jun 02, 2023

May 2023

May was a mixed month for stocks as the NASDAQ surged, the S&P remained about flat, and the Dow Jones Industrial Average took a hit. The NASDAQ advanced 5.9% in May largely thanks to stellar gains in the semiconductor space, notably by NVIDIA (NVDA), Advanced Micro Devices (AMD), and Broadcom (AVGO). The S&P 500 rose 0.4%, while the Dow Jones Industrial Average lost 3.2%. It was a down month around the world–Emerging Markets slipped 1.7%, and Developed Markets sank 4.1%.

Only 3 of the 11 US stock sectors were positive in May as Technology, Communication Services, and Consumer Discretionary led the way. On the flip side, Energy tumbled 10%, followed by Materials (down 6.9%) and Consumer Staples (down 6.2%).

Unemployment increased by 0.3 percentage points to 3.7% in May one month after retreating back to its lowest level since 1969 (3.4%). Inflation remained essentially unchanged MoM, and the Federal Reserve issued its 10th consecutive rate hike at the start of the month, bringing the Fed Funds Rate to 5.25%. Oil was down over 6.5% in May, bringing both WTI and Brent down over 41% from their highs last year.

US Treasury yields spiked sharply in May amid debt ceiling risk. The 1-Month Treasury Bill surged a whopping 93 basis points to 5.28%, followed by the 3-Month at 5.52% (+42 bps) and 6-Month at 5.46% (+40 bps). Long-term bonds, such as the 10-Year, also got a lift, but its yield of 3.64% still puts it as the lowest on the curve. The Canada 10 Year Benchmark Bond Yield increased by 34 basis points in May and Japan’s 10 Year Government Bond Interest Rate ticked up 5 bps. Otherwise, global yields fell in May.

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