Weekly market insights from CIO Thierry Hasse

Last week’s events perfectly illustrated the major drivers of the financial markets in 2024. Apple reached a new valuation high as investors celebrated the company’s advancements in artificial intelligence. Meanwhile, May’s Consumer Price Index (CPI) numbers indicate that inflation is continuing its slow descent towards the 2% target. Additionally, the Federal Reserve kept interest rates on hold, leaving the possibility open for one or two rate cuts in 2024.

Apple’s New High and AI Initiatives

Earlier this week, Apple shares soared to a new all-time high following the release of their much-anticipated AI strategy during the annual developer conference on June 10, 2024. Apple introduced numerous AI features that will be available in the next iPhone release, including a complete overhaul of Siri and integration with ChatGPT capabilities. This positions Apple to offer the most comprehensive application of AI across a vast range of consumer products.

Inflation Cooling

Inflation cooled to 3.3% in May (Source: Bureau of Labor Statistics), reinforcing the view that despite a bumpy first quarter when inflation seemed to reaccelerate, the Federal Reserve’s policy of maintaining higher restrictive rates was warranted. Many categories within the CPI are showing moderation, helping it resume its downward trajectory toward the Federal Reserve’s 2% target.

Federal Reserve’s Rate Decision

On Wednesday, the Federal Open Market Committee (FOMC) decided to keep the Fed Funds rate within the 5.25% to 5.5% range, a decision widely anticipated by financial market observers. However, the Summary of Economic Projections revealed that FOMC members are open to reducing rates one or two times before the end of 2024 if inflation continues to decrease.

Looking Ahead

The last few weeks of June offer little in the way of economic releases that could significantly impact financial markets. With first-quarter 2024 earnings for U.S. corporations largely reported, we will have to wait until mid-July for insights into second-quarter performance. In the meantime, market attention will shift to the speeches and appearances of five Fed members next week. Who among them will provide the best clues about the future of monetary policy?

In Summary

As we enter the summer doldrums, market focus will be on every word from Fed members, eagerly anticipating hints about the future of monetary policy. Stay tuned for their insights and implications for the financial markets.

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The information contained herein represents the views of Elevage Partners at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy of any data compiled herein In addition, there can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Any statement non-factual in nature constitutes only current opinion which is subject to change. These materials are provided for informational purposes only and do not constitute investment advice. Any reference to a security listed herein does not constitute a recommendation to buy, sell, or hold such security. Past performance is no guarantee of future results. The historical returns of any securities and/or sectors mentioned in this commentary are not necessarily indicative of their future performance.