Global equity markets moved higher over May 2024 with excitement growing among investors that interest rate cuts from major central banks might be on the horizon. Economic data was relatively mixed over the month, heightening investor bets that interest rates may soon start going down. Manufacturing sector activity largely improved, but it is still hindered by relatively weak global demand.

Inflation continues to subside. Still, inflationary pressures remain at elevated levels, which is putting the squeeze on many households and businesses. The U.S. Federal Reserve Board (“Fed”) held a meeting in May, holding its federal funds rate steady at a target range of 5.25%–5.50%. The Bank of England also held a May meeting where it held steady at 5.25%.

The S&P/TSX Composite Index advanced over the month, reaching a new record high along the way. The Materials sector was the best performer in May, benefiting from higher gold prices. U.S. equities also finished higher. Yields on 10-year government bonds in Canada and the U.S. finished lower over the month.

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