Sell in May? They certainly did, but rather than go away as the old stock market adage suggests, traders returned to aggressively buy the dip, causing some of the wildest monthly swings in recent times.
All that means “there will be a large degree of scepticism in the market that we have seen the bottom yet”, said Stuart Cole, chief macro strategist at Equiti Capital.U.S. 10-year Treasury yields are ending May near where they started, but in between was a rise to 3-1/2-year highs above 3.2%, a tumble to six-week lows, and then another rise on the last day of the month.
Lack of visibility on interest rates and the economy will “continue to feed volatility,” said Francois Savary, cio of wealth manager Prime Partners. “Where the terminal rate is, still remains the key issue.” The stock segment arguably most vulnerable to interest rate swings - U.S. tech - meanwhile plunged 15% in the first 20 days of the month, before rebounding 12%.
However, while an imminent end to negative euro zone interest rates has knocked the U.S. dollar index off two-decade highs, investors are wary of screaming “peak dollar”, given the Fed shows no signs of slowing its policy tightening campaign.
Certainly ... 'To be continued...'