TRG Fast Facts

By TRG Advisors on May 10, 2024

Weekly data-driven insights on the markets and economy

1. Earnings Season Continues

On Wednesday Dow Jones futures slipped 9 bps, or 0.02%, S&P 500 futures inched lower by 0.07%, and Nasdaq 100 futures fell nearly 0.2%. A slate of falling tech stocks weighed on the S&P 500 and Nasdaq. Investors will keep eyes on the next batch of earnings reports as earnings season continues.[i]

2. Auction Reaction

The Treasury’s $42 billion auction of 10-year notes on Wednesday was met with mediocre results. The auction tailed by roughly 1 bp and indirect bidders took a below-average 65.5%. The 10-year yield rose roughly 3 bps to 4.49%, the 2-year yield rose just over 1 bp to 4.84% and the 30-year yield rose nearly 3 bps to 4.63% as traders appeared to react to remarks made by Minneapolis Federal Reserve President Neel Kashkari.[ii]

3. Data-Dependent

Minneapolis Federal Reserve President Neel Kashkari said stalled inflation buoyed in part by housing market strength means that the Fed will need to hold borrowing costs steady for an “extended period,” and possibly all year. He noted that he will also be tracking developments in the labor market, where a “marked” turn to weakness could also justify a rate cut. In March he thought the Fed would need to deliver two rate cuts this year, and by next month when Fed policymakers publish fresh projections, he may mark that forecast down to just one cut or even no cuts, depending on the data.[iii]

4. Global Shares Rally

A gauge of global stock markets rallied on Monday on optimism that major central banks will cut interest rates this year, while the yen weakened against the dollar after a surge last week from Japan’s suspected currency intervention. The dollar index, a measure of the U.S. currency against six major trading peers, fell 0.07%, lower for a fourth straight session after Friday’s data showed the lowest jobs gain since October calmed any angst that the Fed might even hike again. MSCI’s gauge of stocks across the globe rose 0.50% to close at 1,066.73, its highest since June 2022.[iv]

5. TikTok GDP Dance

TikTok and its Chinese parent company ByteDance sued in U.S. federal court on Tuesday seeking to block a law signed by President Joe Biden that would force the divestiture of the short video app used by 170 million Americans or ban it.[v] TikTok creators and opponents of the law called the legislation a threat to their livelihoods and said it would have a devastating economic impact. A study issued Wednesday by Oxford Economics, a financial consultancy, said TikTok drove $14.7 billion in small-business owners’ revenue in 2023 and contributed $24.2 billion to U.S. gross domestic product last year. It found that TikTok supports at least 224,000 jobs in the United States, with the app’s greatest economic impact seen in California, Texas, Florida, New York and Illinois.[vi]

6. K-Shaped Consumer

Citigroup CEO Jane Fraser says that consumer behavior has diverged as inflation for goods and services makes life harder for many Americans. Fraser is seeing a “K-shaped consumer.” That means the affluent continue to spend, while lower-income Americans have become more cautious with their consumption. Strong employment figures and persistent inflation in some sectors have pushed back expectations for when the Fed’s rate easing will begin. That means Americans must live with higher rates for credit card debt, auto loans and mortgages for longer.[vii]

7. Sleeping Beauties: Reawakening Fashion

On Monday, Vogue hosted the Met Gala, an annual charity event that drew in many fashion, music, film, and social media celebrities to grace the red carpet. The in-person event was complemented by a live stream of the gala on Vogue’s official YouTube channel, catapulting it to one of the year’s most-watched broadcasts with over 812,800 peak viewers on the livestream. This led Vogue’s YouTube channel into the top 10 most popular channels of 2024 (as of May 7).[viii]

8. Keys to Success

According to neuroscientist Lisa Feldman Barrett, highly successful people use the three following mental shifts to get ahead of stress at work: practicing, calming and reframing. Practicing can be in the form of giving a speech in front of your family members before doing the real thing or doing mock job interviews before speaking with a hiring manager; calming could be practicing quick, easy mindfulness sessions; and reframing means reminding yourself that the nervousness you feel is normal and serves a purpose.[ix]

[i] Evans, Brian, “Dow futures are little changed after index posts sixth straight positive day: Live updates,” CNBC, May 8, 2024, https://www.cnbc.com/2024/05/08/stock-market-today-live-updates.html. Accessed May 8, 2024.

[ii] Lou Chen, Vivian, “10-year Treasury yield finishes higher for first time in six sessions,” MarketWatch, May 8, 2024, https://www.marketwatch.com/story/ten-year-treasury-yields-rise-after-falling-five-days-in-a-row-a6a550f5. Accessed May 8, 2024.

[iii] “Fed may need to hold rates steady all year, Kashkari says,” Reuters, May 7, 2024, https://www.reuters.com/markets/rates-bonds/fed-may-need-hold-rates-steady-all-year-kashkari-says-2024-05-07/. Accessed May 8, 2024.

[iv] Lash, Herbert and Nell Mackenzie, “Global shares rally on rate cut hopes, yen weakens,” Reuters, May 6, 2024, https://www.reuters.com/markets/global-markets-wrapup-1-2024-05-06/. Accessed May 8, 2024.

[v] Shepardson, David, “TikTok, ByteDance sue to block US law seeking sale or ban of app,” Reuters, May 7, 2024, https://www.reuters.com/legal/tiktok-bytedance-sue-block-us-law-seeking-sale-or-ban-app-2024-05-07/. Accessed May 8, 2024.

[vi] Lorenz, Taylor, “TikTok creators say House ban threatens lives and livelihoods,” The Washington Post, March 14, 2024, https://www.washingtonpost.com/technology/2024/03/13/tik-tok-ban-react-creators/. Accessed May 8, 2024.

[vii] Son, Hugh, “Citigroup CEO Jane Fraser says low-income consumers have turned far more cautious with spending,” CNBC, May 6, 2024, https://www.cnbc.com/2024/05/06/citigroup-ceo-jane-fraser-says-low-income-consumers-are-more-cautious.html. Accessed May 8, 2024.

[viii] Murko, Dmytro, “Met Gala 2024 broadcast drew over 800,000 Peak Viewers, setting a record for Vogue channel,” Streams Charts, May 7, 2024, https://streamscharts.com/news/met-gala-2024-viewership#:%7E:text=Vogue%27s%20YouTube%20channel%20hosted%20the,viewership%20of%20Met%20Gala%202023. Accessed May 8, 2024.

[ix] Jackson, Ashton, “Highly successful people use this mental shift to get ahead of stress at work, says neuroscientist,” CNBC, May 7, 2024, https://www.cnbc.com/2024/05/07/how-highly-successful-people-get-ahead-of-work-stress-neuroscientist.html. Accessed May 8, 2024.