With the April numbers in the books, let's jump right into the charts.

The big story from last month was once again inflation. Following an increase of 26.89% year-over-year of the M2 Money Supply, US inflation reached 8.54%. According to Kristalina Georgieva, an IMF Director, we are currently dealing with unintended consequences from excessive spending, which was done to support the economy during the COVID-19 recession.
With rising inflation, The Real Interest Rate for a 1-year US Treasury bond dropped to -7.21%, which is the lowest reading since 1951. According to John Authers, an editor at Bloomberg, higher inflation correlates with a lower P/E Ratio, which currently stands at 20.76 for the S&P 500.

Along with inflation, yields rose for US Treasury Bonds, corporate bonds and mortgages. In recent months the 10-year Treasury yield decoupled from the Copper to Gold Ratio, which often acts as a leading indicator for interest rates.

As mentioned in last month's edition, yields for short-term Treasury bonds rose faster than for long-term bonds, leading to an inverted Yield Curve. An inverted Yield Curve is often considered to be a predictor of an economic recession.

Naturally, rising yields led to falling bond prices, which declined along with stocks. Segmenting the US stock market, growth stocks declined more than value stocks, which makes sense since they have earnings that lie further in the future and that get discounted more heavily through rising yields. Accordingly, the Nasdaq underperformed the S&P500.
Looking at Sectors, the Technology, the Telecommunications, and the Consumer Discretionary sectors underperformed the market, while the Energy sector outperformed along with Basic Materials, Utilities, Healthcare, and Consumer Staples.

Internationally, Emerging and Developed Markets declined along with the S&P 500, which is still only down -1.23% year-over-year. In a National Stock Market Comparison over the past year the Russian MOEX stands out at -54.02%, the Japanese Nikkei at -23.19%, the Chinese Shanghai Composite at -14.25%, and the German DAX at -19.80% (in US Dollar).

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