May 19, 2017

For the week ending 19 May 2017

  • Special counsel appointed in Russia probe
  • UK’s May unveils election manifesto
  • Merkel’s prospects bright after state elections
  • Corruption scandal touches Brazil’s president


Global equities saw little net change this week, but there was a good bit of volatility midweek as political chaos intensified in Washington. The yield on the 10-year US Treasury note fell to 2.25% from 2.34% a week earlier while West Texas Intermediate crude oil rose to $50.30 a barrel from $47.50 last week amid signs OPEC and major producers such as Russia will retain output curbs through March of 2018. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), jumped as high as 15.50 at midweek before slipping to 11.90 on Friday. The week began at a placid 10.80. 

For the week ending 19 May 2017

  • Special counsel appointed in Russia probe
  • UK’s May unveils election manifesto
  • Merkel’s prospects bright after state elections
  • Corruption scandal touches Brazil’s president


Global equities saw little net change this week, but there was a good bit of volatility midweek as political chaos intensified in Washington. The yield on the 10-year US Treasury note fell to 2.25% from 2.34% a week earlier while West Texas Intermediate crude oil rose to $50.30 a barrel from $47.50 last week amid signs OPEC and major producers such as Russia will retain output curbs through March of 2018. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), jumped as high as 15.50 at midweek before slipping to 11.90 on Friday. The week began at a placid 10.80. 

May 12, 2017

For the week ending 12 May 2017

  • Trump agenda tougher sell after Comey firing
  • Macron cruises to French presidency
  • South Korea elects new president
  • Volatility touches multi-decade lows
  • IMF expected to rejoin Greek bailout


Global equities were little changed on the week amid presidential elections in France and South Korea and fresh political turbulence in Washington. The yield on the US 10-year Treasury note, at 2.34%, saw scant net change on the week. West Texas Intermediate crude oil firmed modestly, to $47.50 a barrel from last week’s $45.50.

For the week ending 12 May 2017

  • Trump agenda tougher sell after Comey firing
  • Macron cruises to French presidency
  • South Korea elects new president
  • Volatility touches multi-decade lows
  • IMF expected to rejoin Greek bailout


Global equities were little changed on the week amid presidential elections in France and South Korea and fresh political turbulence in Washington. The yield on the US 10-year Treasury note, at 2.34%, saw scant net change on the week. West Texas Intermediate crude oil firmed modestly, to $47.50 a barrel from last week’s $45.50.

May 5, 2017

For the week ending 5 May 2017

  • Payroll rebound boosts June Fed rate hike chances
  • Macron poised to win French presidential election
  • Brexit battle lines harden
  • European growth picks up


Global equities extended their gains this week against a backdrop of improved economic growth, particularly in Europe. Slumping commodity prices may prove worrisome down the road, however, with the price of West Texas Intermediate crude falling to nearly a six-month low, ending the week near $45.50, down from $49.00 last Friday. The yield on the US 10-year Treasury note rose modestly, to 2.35%, up 4 basis points on the week. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), held steady near 10.

For the week ending 5 May 2017

  • Payroll rebound boosts June Fed rate hike chances
  • Macron poised to win French presidential election
  • Brexit battle lines harden
  • European growth picks up


Global equities extended their gains this week against a backdrop of improved economic growth, particularly in Europe. Slumping commodity prices may prove worrisome down the road, however, with the price of West Texas Intermediate crude falling to nearly a six-month low, ending the week near $45.50, down from $49.00 last Friday. The yield on the US 10-year Treasury note rose modestly, to 2.35%, up 4 basis points on the week. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), held steady near 10.

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James T. Swanson, CFA

Chief Investment Strategist

James Swanson, CFA, is an investment officer and chief investment strategist of MFS Investment Management® (MFS®). He is also a fixed income portfolio manager. 

James offers his insights and perspective on the markets and the economy to MFS clients around the world through in-person meetings, his Strategist's Corner online column and a blog launched in 2011. He is a frequent guest commentator on the markets on CNBC, Fox Business and Bloomberg Television and is often quoted in leading national and financial publications, including the Wall Street Journal, the New York Times, the Los Angeles Times and Investor's Business Daily. James joined MFS in 1985. He was named fixed income strategist in 2001 and chief investment strategist in 2004. 

He is a graduate of Colgate University and the Harvard Business School. James holds the Chartered Financial Analyst designation.

May 2017

by James T. Swanson, CFA, Chief Investment Strategist

There are two primary reasons to be cautious about investing fresh capital in today’s richly valued US equity markets, in my view. The first reason is shaky pricing power — or top line growth — for companies in the S&P 500 Index. The second is the low level of investment that large companies are making in their collective futures.
 

Typically, when you get beyond the midpoint in a business cycle, pricing power improves as inflation kicks in. Revenues grow quickly, outpacing cost increases. In previous cycles, once inflation took hold, publicly traded company revenues grew faster than the US economy. However, fully eight years into this cycle, S&P 500 Index revenues have struggled to keep pace with the economy as a whole, with many industries struggling to raise prices. Recent price cuts in the telecom and auto industries have underscored this point. 

by James T. Swanson, CFA, Chief Investment Strategist

There are two primary reasons to be cautious about investing fresh capital in today’s richly valued US equity markets, in my view. The first reason is shaky pricing power — or top line growth — for companies in the S&P 500 Index. The second is the low level of investment that large companies are making in their collective futures.
 

Typically, when you get beyond the midpoint in a business cycle, pricing power improves as inflation kicks in. Revenues grow quickly, outpacing cost increases. In previous cycles, once inflation took hold, publicly traded company revenues grew faster than the US economy. However, fully eight years into this cycle, S&P 500 Index revenues have struggled to keep pace with the economy as a whole, with many industries struggling to raise prices. Recent price cuts in the telecom and auto industries have underscored this point. 

April 28, 2017

For the week ending 28 April 2017

  • US Q1 economic growth rate slumps to 0.7%
  • ECB maintains dovish stance
  • Trump outlines tax reform proposal
  • US slaps tariffs on Canadian lumber
  • Merkel takes hard line on Brexit

 

Global equities staged a relief rally after centrist Emmanuel Macron advanced to final round of the French presidential elections, edging out populist Marine Le Pen for the top spot. Macron holds a 20-point lead in the polls ahead of 7 May’s vote. The rally lifted the MSCI World Index to an all-time high on Wednesday. US Treasury yields backed up to 2.31% from 2.22% a week ago as risk aversion ebbed. Oil prices fell to $49.00 from near $50 a barrel last week as fresh Libyan crude supplies hit the market. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), shed recent gains, sliding to 10.6 from 14.7 a week ago.

April 28, 2017

For the week ending 28 April 2017

  • US Q1 economic growth rate slumps to 0.7%
  • ECB maintains dovish stance
  • Trump outlines tax reform proposal
  • US slaps tariffs on Canadian lumber
  • Merkel takes hard line on Brexit

 

Global equities staged a relief rally after centrist Emmanuel Macron advanced to final round of the French presidential elections, edging out populist Marine Le Pen for the top spot. Macron holds a 20-point lead in the polls ahead of 7 May’s vote. The rally lifted the MSCI World Index to an all-time high on Wednesday. US Treasury yields backed up to 2.31% from 2.22% a week ago as risk aversion ebbed. Oil prices fell to $49.00 from near $50 a barrel last week as fresh Libyan crude supplies hit the market. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), shed recent gains, sliding to 10.6 from 14.7 a week ago.