Markets pushed higher again this week, continuing a steady upward grind even as the macro backdrop stayed anything but quiet.
Strong consumer data and firm services activity kept sentiment supported, while inflation pressures and geopolitical risks continued to simmer in the background. The result: a market still climbing, but with its attention split in multiple directions.
Equity markets continued to move higher this week, building on recent momentum. Year-to-date gains remain solid across the board, led by the Nasdaq.
The steady upward move in equities reflects continued confidence in economic resilience, with investors balancing stable growth data against a still-elevated rate environment. Markets also appear to be digesting geopolitical risks, particularly ongoing tensions in the Middle East, without significant disruption to risk appetite.
Treasury yields were relatively stable this week, with the 10-year Treasury yield closing at 4.329%. This represents a modest increase of 0.9 basis points on the week and 15.7 basis points year-to-date.
The yield curve continues to show a slight inversion at the 1-year mark, though the overall shape remains much more normalized compared to late last year. The stability in yields reflects a market that is balancing solid economic data with expectations that policy will remain restrictive for longer.
External factors, including elevated energy prices and geopolitical tensions, continue to play a role in anchoring inflation expectations and keeping upward pressure on longer-term yields.
FX markets stayed rangebound this week, with the dollar holding steady despite stronger U.S. data and improving sentiment.
With rate expectations largely unchanged, major currency pairs lacked a clear catalyst, leaving markets broadly sideways and waiting for the next inflation or policy signal to break the stalemate.
Commodities were broadly mixed this week. Brent crude oil was essentially flat (-0.04%) but remains significantly elevated year-to-date (+63.27%), continuing to reflect supply concerns and geopolitical risk.
Cocoa rose 4.60% on the week, though it remains sharply lower year-to-date (-43.43%), highlighting ongoing volatility in soft commodities.
Coffee also moved higher (+3.43%), while grains showed modest gains, with corn up 1.31%, soybeans up 0.95%, and wheat rising 2.27%. Milk was relatively unchanged (+0.06%), while palm oil increased 1.15%, continuing its upward trend on the year.
This week’s data pointed to a consumer that remains engaged, alongside steady business activity. U.S. retail sales came in strong at 1.7% (up from 0.7%), while business inventories increased 0.4%. Pending home sales rose 1.5%, though at a slower pace than the prior 2.5%, suggesting some moderation in housing momentum.
On the manufacturing and services side, S&P flash PMIs showed continued expansion, with services at 51.3 and manufacturing at 54.0, both comfortably in growth territory. Labor market data remained stable, with initial jobless claims ticking up slightly to 214,000 from 208,000.
Consumer sentiment improved meaningfully, rising to 49.8 from 47.6, indicating some stabilization in consumer outlook despite inflation and rate concerns.
Markets remain in a constructive position, with equities advancing alongside relatively stable yields. Economic data continues to support a narrative of resilience, particularly in the consumer and services sectors, while inflation pressures, partly driven by energy and global dynamics, remain in focus.
The yield curve’s mild inversion suggests that while risks have not disappeared, the broader market environment has become more balanced. Going forward, attention will remain on inflation trends, central bank policy, and geopolitical developments as key drivers of market direction.
Investors continue leaning into resilience despite a mixed and only moderately instructive data backdrop.
Inflation showed signs of easing, rates edged higher without disruption, and geopolitical risk—particularly in energy—remained present but not defining.
Equities posted strong gains over the two-week period, with broad-based strength across major indices as earlier weakness faded. The move was supported by easing geopolitical pressure, particularly signs of stabilization around the Iran conflict.
The shutdown’s data backlog is still rippling through reports leaving traders piecing together a story from fragments.
