All eyes remain on Congress as the June “x-date” approaches
May 2023
Key Observations
- Market volatility persisted in May as investors try to digest potential Fed policy action in June and the possibility of a U.S. default should a deal not be reached to raise the debt limit.
- Significant progress toward a debt ceiling agreement was made in eleventh hour of the month.
- Most market indexes posted negative returns, with limited bright spots in growth-oriented segments.
- Short-term rates remain higher than long-term and the U.S. yield curve remains inverted. Cash rates look attractive, but tactically timing the market based on yield ignores other factors when allocating fixed income assets.
Market Recap
We’ve highlighted our theme of persistent heightened market volatility in many of our market reviews this year and May continued to deliver on that premise. Financial markets finally started to digest the regional banking turmoil from earlier in the year, a better-than-expected earnings season and a concentrated growth rally fueled by optimism in the AI industry helped propel U.S. equities for the first half of the month.
