FUNDAMENTAL REVIEW FOR THE WEEK (6 - 10 May 2024)

Last week was again in favor of risky assets. This happened against the background of a not very “hawkish” meeting of the American regulator the Federal Reserve on Wednesday, as well as rather weak indicators for the Western labor market on Friday - the data came out worse than the previous period and a rather modest forecast. Not to say that the phenomenon is new, if you look at history - from time to time such “resets” of beautiful numbers from the “good mood bureau of the American president” occur.

An important factor for many financial assets is the decline in geopolitical tensions in the Middle East amid talk and rumors about resolving the Israeli-Palestinian conflict and the potential establishment of supply chains from the region. Yes, the negotiation process is progressing rather difficultly, the parties are bargaining over the conditions for suspending the evacuation of Rafah in the Gaza Strip (it must precede the outbreak of hostilities) and freezing plans for a ground operation. But the fact of negotiations is there and now there is no such obvious reason for retreating to the defensive dollar as was previously the case. But here you need to very closely “keep your finger on the pulse” - everything can “break out” again in a matter of hours.

The coming week will not be full of important economic events. The meeting of the Central Bank of Australia (Tuesday) and the Bank of England (Thursday) are interesting, especially BoE. In England, inflation is high, but the budget is bursting at the seams and the government is putting pressure on the BoE to reverse policy, especially after the loss of regional elections by Sunak's ruling party.

However, this is not a question of the upcoming meeting, but of subsequent ones; now the reaction will be to the rhetoric of the chairmen.

It is also worth noting a fairly large number of performances
Fed members this week, markets will react to their rhetoric, but before the publication of US inflation for April on May 14-15, strong trend movements are unlikely; before this time, the market has a pretty good chance of taking a break and starting sideways trading in the range.

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Good luck and informed investment decisions!