Here’s The Asset Guidance Group Outlook for the Week Ahead… 

 This week the focus turns back to U.S. inflation numbers, with CPI due on
Wednesday and producer prices the following day. The jobs data revealed some
softening, but the labor market remains tight and keeps a rate hike in May on the
table. Disappointing inflation reports would only strengthen the case for the Fed to
tighten policy further. The minutes from the last FOMC meeting will also add color
to how seriously a pause was considered in light of last month’s banking crisis.
Speaking of banks, Q2 earnings season kicks off on Friday with reports due from
the large U.S. banks, where investors may gain insights into the health of their
balance sheets and how much they benefitted from inflows. Also on Friday, retail
sales and consumer sentiment will reveal how the American consumer is holding
up. Finally, watch the results from this week’s 10 and 30-year Treasury auctions
given the recent rate volatility. Overseas, there is little data coming from a
shortened week in Europe and the UK, outside of the ECB meeting minutes. In
China, a busy week starts with March inflation data later tonight, where consumer
prices are expected to hold steady while PPI continues its deflationary trend. The
country’s trade data is anticipated to have declined around 7% YoY. In central bank
news, Canada is forecast to hold rates steady at 4.5%.[1]

Recapping Last Week

U.S. equity indexes fell in a shortened week as investors extrapolated recession
likelihood after services demand and labor markets unexpectedly weakened. The
Russell 2000 Index slid 2.5%+, while the Nasdaq Composite lost 1%+ and the S&P500
was down fractionally. S&P500 sector performance was mixed, with the gainers led
by 3%+ advances in the defensive utilities and healthcare names, while consumer
discretionary dropped 3%+. Crude oil gapped 6%+ higher after OPEC+ announced a
surprise production cut of over 1M barrels per day starting next month. Gold prices
added nearly 2%, with the yellow metal now just 3% below the all-time highs from
August 2020. U.S. Treasury yields sank after the JOLTS report saw job openings fall
to the lowest level since May 2021 and ADP private payrolls increased by just 145K
in March, the first signs of some labor market softening. Initial jobless claims also
jumped to 228K. However, the monthly employment report came in near
expectations at +236K, a notable reduction from the prior two months but still
indicative of a healthy jobs picture. Average earnings growth slowed slightly to 4.2%
YoY, a positive sign for inflation but still above the Fed’s comfort level. In other news,
the U.S. services sector slackened much more than forecast in March as prices paid
fell to the lowest in three years and new orders plunged. That release, along with a
manufacturing sector that continued to contract at a quicker pace, stoked fears of
a broader economic slowdown. Internationally, Australia became the second major
central bank after Canada to pause rate hikes, citing slowing household spending
while keeping the door open to future policy adjustments. In Germany, the
manufacturing sector continued to rebound in February as factory orders rose for a
third straight month and industrial production jumped 2% on strong vehicle
demand. Lastly, China’s factory activity stalled in March, but services surged to the
highest levels since November 2020 on robust new orders and employment. [2]

Chart of the Week:

Gold futures (/GC) continued their recent advance, rising 2% and positive five of
the last six weeks. Gold prices have been in a wide range since the pandemic’s
start, trading between $1,700 and $2,000 and now pressing the upper bound fort the third time. The first run set the all time high at $2,089. The MACD is confirming bullish momentum, with its highest reading since the historic high. A technical bull flag pattern points to a potential target near $2,165. Whether it achieves that could rest on the state of the U.S. labor market and its influence on the Federal Reserve’s decision at the May meeting. If the Fed hikes rates again it could put pressure on gold. If they decide to pause, it would likely cause weakness in the U.S. dollar and may boost gold prices.

 Click here to view chart. [3]

Sources: [1] [2] [3] tdainstitutional.com tdainstitutional.com; Any performance data reported by Asset Guidance Group, LLC has been grouped and reported by kwanti.com, imported from TDAmeritrade Institutional, Risk categories as scored by Grable-Lytton test and grouped by like risk tolerance levels; NOTE: individual account performance grouped solely by model classification type in terms of risk tolerance. Individual portfolios include equivalent equities exposures via like models, but many may hold additional investments like structured notes, fixed income investments such as CDs, bonds, and other individually preferred securities. 1-Week risk score denotes overall performance of all AGG client portfolios grouped together by like-risk tolerance scores not by identical investment allocations; [4] [5] Macro Monday (tdainstitutional.com);

*All other Asset Guidance Group analysis, www.stockcharts.com; All index- and returns-data from Yahoo Finance; news from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat,0020Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet; Chart from Indeed’s Hiring Lab.

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