John Hancock: Weekly Market Recap Week Ended May 10th
A gauge of investors’ expectations of short-term stock market volatility jumped 24% for the week, breaking out of the narrow range that it had been stuck in over the previous three months. The Cboe Volatility Index closed on Friday at 16 after reaching as high as 23 in intraday trading on Thursday.
A key measure of U.S. inflation rose less than economists had expected, despite recent strength in the labor market and GDP growth. Excluding volatile food and energy costs, the Consumer Price Index rose 2.1% in April compared with the same month a year earlier and just 0.1% relative to March’s figure.
A portion of the yield curve for the U.S. Treasury bond market inverted, marking the second such instance in less than two months. On Thursday, the yield of the 10-year bond closed at 2.45%, below the 2.46% yield for notes maturing in six months. Instances of shorter-term debt yielding more than longer-term debt are historically rare, and have often preceded recessions.
China’s bad day
The week’s unsettling news about trade weighed on Chinese stocks more heavily than it did on U.S. equities. A Chinese mainland stock index tumbled 5.6% on Monday—its biggest single-day decline since 2016—before recovering some of that big loss later in the week.