Macro & Market weekly wrap-up

Last week, the two most important macro data were:

1) An increase in first-time unemployment benefits (initial claims) to the level of 231k (the highest since September 2, 2023) - see Figure 1. These may be the beginnings of a more visible slowdown in the labor market, especially since the monthly labor market report for April was already weaker. Figure 2 shows Initial Claims in both the SA and NSA series (NSA series also increased by about 20k in the last week).

2) A significant decline in consumer confidence as expressed by the University of Michigan Consumer Sentiment Index. See Figure 3. This is the lowest level in 5 months. Historically, large declines in the index preceded a recession in the economy. Figure 4 shows a close-up of the last decline.

Both of the above data are widely considered as leading. The market, however, is still focused (as is the Fed) on inflation data (which is lagging by nature).

The S&P500 closed the previous week in positive territory and this is the 3rd positive week in a row - see Figure 5.

The current month (MtD) is also already in positive territory. The S&P500 is only 0.60% away from its previous all-time high set on March 28 this year - see Figure 6.