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Last week featured significant macroeconomic and microeconomic events. On the macroeconomic side, the Federal Open Market Committee (FOMC) meeting took center stage, with Federal Reserve (Fed) Chair Jerome Powell striking a generally dovish tone. Powell acknowledged the lack of further progress toward the Fed's 2% inflation target. However, notably, he hinted that the next policy rate move is unlikely to be a hike and mentioned that unexpected weakness in the labor market could prompt interest rate cuts. Additionally, the meeting also announced that the pace of balance sheet runoff will start to be tapered off on June 1.1 Further, with the modest undershooting of the change in nonfarm payrolls and very benign average hourly earnings data on Friday,2 equity and interest rate markets reacted with a relief rally. The 10-year Treasury rate declined by 16 basis points (bps) last week after rising almost 80 bps since the beginning of 2024.3 The S&P 500 Index closed higher on the week.4
On the microeconomic side, all eyes were on Apple, and the tech giant did not disappoint. Apple comfortably surpassed market expectations on revenue and earnings. Apple also announced a massive $110 billion additional stock buyback, making it the largest buyback authorization in the stock market’s history!5 The stock rallied 6% the day after the earnings announcement.6
Looking ahead, the upcoming week is poised to be relatively quiet on the data front, with fewer high-profile releases and the majority of first-quarter 2024 corporate earnings now behind us. We will see the Senior Loan Officer Opinion Survey on Bank Lending Practices on Monday,7 followed by preliminary May University of Michigan consumer sentiment survey on Friday.8 Additionally, a series of speeches from Fed members throughout the week will provide further context on monetary policy.9 Internationally, the Bank of England and Sweden’s central bank are set to announce their respective monetary policy decisions.10,11
Sources:
1Federal Reserve Board – Transcript of Chair Powell’s Press Conference May 1, 2024; May 2024
2-4,6-7Bloomberg
5CNBC – Apple announces largest-ever $110 billion share buyback as iPhone sales drop 10%; 5/2/24
8,9MarketWatch – U.S. Economic Calendar; as of 5/6/24
10Bank of England – Monetary Policy Committee Dates for 2024 and 2025; as of 5/6/24
11Riksbank Calendar; as of 5/6/24
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