Jack Janasiewicz and Brian Hess discuss May’s new market highs, capital spending on artificial intelligence (AI), bond market volatility, and current positioning in the Natixis model portfolios.
- Equity markets set new all-time highs, with large-cap stocks continuing to lead the way.
- Capital spending related to AI seems like it could actually be a growth driver, not just pushing stock valuations higher but actually pushing the economy higher.
- The bond market rallied through mid-month, then reversed, with yields pushing back toward their previous highs as concerns about inflation persist – most notably in international markets.
- International equity performance has rallied, particularly in Japan and China, but policy actions are likely to determine whether these trends will continue.
- The Natixis model portfolios have been overweight US stocks and underweight international, which up until very recently has worked well – and on a year-to-date basis has still worked well.
- Although we had expected to see greater breadth in the markets – beyond large-cap US equities – rates may need to actually push lower for that expansion to occur.
- We continue to maintain confidence in the US consumer, supported by data showing that unemployment remains low and real wages are increasing as inflation continues to moderate.
