Off the backs of a Fed meeting and soft jobs report, equities headed for their best 3-day rally of the year. A positive earnings season has also been a catalyst. The 10-year Treasury yield has decreased about 10 basis points to 4.5%. Many traders will watch the auctions this week of a combined $67 billion of 10 and 30-year securities to see how much demand there is for longer-dated fixed income.

It is a lighter week in economic data releases however, we are getting a large number of Fed speakers. We will be observing to see what kind of language is used around potential rate cuts into year-end and the recent soft labor reports. As the year has progressed, markets have priced out many cuts for 2024. Since the Fed meeting Wednesday, that trend has reversed as traders have cautiously upped bets for more easing this year.

The S&P 500 has had a great start to May, up over 2% after taking a pause in April. We are back to 5,150 level, close to the all-time highs of 5,260. This rally has coincided with better breadth in the market which the bulls hope is sustained. Our Newton models show increased strength out of Emerging Markets on the back of stronger Chinese markets. China makes up nearly 30% of the index. Energy is the biggest laggard. Notably, oil has had a muted month while Hamas accepted a cease-fire proposal for Gaza. Communications is on top followed by Industrials and Utilities.