Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.
Author: Wei Haoming.

The problem of the depreciation of the Japanese yen seems too big for the Bank of Japan to solve even by raising interest rates this month. Although there have been signs of intervention by the Bank of Japan, the yen has fallen by 11% so far in 2024. Despite the obvious intervention having a positive effect and the favorable decline in US bond yields also putting pressure on the overall value of the dollar, the yen to dollar exchange rate only rose by less than 2% last week. This indicates that Japan needs to provide more intervention to decisively reverse the downward trend of the yen.

The yen has fallen 11% this year, adding to Japan's inflation pressure and making it possible for the Bank of Japan to raise interest rates at the July 31st meeting, which would be the second raise since 2007. Traders are focusing on data released on Friday. A survey of economists shows that Japan's inflation rate is expected to rise slightly to 2.9% in June, far above the Bank of Japan's target of 2%.

Yujiro Goto, head of forex strategy at Nomura Securities, said, 'If the yen remains weak at the July meeting, the Bank of Japan needs to consider raising interest rates early, even when deciding to reduce the speed of Japanese government bond purchases.' Nomura Securities said in a report on Thursday that this obvious intervention puts pressure on the Bank of Japan to tighten its policies accordingly.

Data from the swap market shows that the likelihood of the Bank of Japan raising interest rates by 10 basis points has dropped from 59% before the yen appreciation last Thursday to 51%. This leaves room for the yen to rebound after the Bank of Japan raises interest rates, but even so, any upward movement may not be sufficient to break the bearish trend of the yen.

Some analysts believe that if the Bank of Japan also raises interest rates when announcing a reduction in the size of bond purchases, this action may be seen as driven by the volatile yen rather than its mission to stabilize prices. Goto believes that if the Bank of Japan raises interest rates by 15 basis points, the US dollar may fall 2 to 3 units against the yen, but raising interest rates alone is unlikely to be enough to change the trend of this currency pair. Forward transactions show that the probability of such an appreciation is only about 35%.

Similarly, although Barclays Bank expects the Bank of Japan to raise its interest rate target to 0.25% this month, it believes that the impact on the exchange rate will be limited and expects the dollar to yen exchange rate to fall to 160 at the end of this quarter. Last Friday, the yen exchange rate was about 158 yen to one US dollar.

Analysis of central bank accounts suggests that Japan spent about 3.5 trillion yen ($22 billion) to support the yen last Thursday, marking the third intervention this year.

Mitul Kotecha, head of Asia forex and macro strategy at Barclays Bank in Singapore, said, 'Although yen weakness raises expectations that the Bank of Japan may raise interest rates this month, we believe that the difference between domestic and foreign yields is too great to allow for sustained reversal.'

Those bullish on the yen are likely to pin their hopes on the retail sales data for the US, which is expected to show a slowdown of the world's largest economy, to put further downward pressure on US Treasury yields and push down the dollar against the yen. However, if the data is strong, their focus will quickly return to the Bank of Japan's policy decisions. Ray Attrill, head of forex strategy at the National Australia Bank in Sydney, said, 'If there is no change in interest rates, we are likely to see new yen selling.'

Editor/Jeffy