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: Zhao Jinbin
Investors have flocked to the monthly two-year treasury bond issuance from the US Treasury Department, which strongly demonstrates investor confidence in the Federal Reserve's interest rate cuts beginning this year.
According to data, the two categories of bidders including investors were allocated a total of 91% in the three categories of bidders in this auction, reaching a record high since 2003. The allocation ratio of the third category, primary dealers, was only 9%, setting a record low. The auction size was $69 billion, marking a historical record, and the winning yield was 4.434%, which was more than 2 basis points lower than the pre-issue trading level at 1 pm Eastern Time when bidding closed. This was the lowest bid-to-cover ratio for two-year Treasury bonds since January when the bond sale size was $60 billion.
Oxford Economics analyst John Canavan said that the prospect of the Fed laying the foundation for a rate cut in September “maintained strong short-term demand for US bonds this month, and this demand continued into the bidding this afternoon.” The yield on two-year Treasury bonds peaked at over 5% at the end of April and has steadily declined ever since, as the price of interest rate futures reflects a bet that the Fed will cut rates by at least 25 basis points twice before the end of 2024 from September. When policymakers met at the end of July for the eighth consecutive interest rate policy meeting, they signaled that they had adjusted the interest rate volatility range to current levels of 5.25%-5.5% for a year.
Canavan of the Oxford Economics think tank said that the indirect bidding strength usually has a strong correlation with the demand of domestic investment funds, and it looks like investment funds may have been seeking entry before the expected interest rate cut later this year.
Between a record $6.154 trillion money market funds and investors locking in yields for the next two years, the scale of the demand for two-year Treasury bonds has been highlighted with the largest difference between expected and actual yields since 2019, and it comes as the Fed is set to cut rates.
Ian Lyngen, the head of the US interest rate strategy at Bank of Montreal, wrote in a report, “There is still a lot of cash on the sidelines in the money and Treasury markets, which is aligned with the view that investors are now beginning to enter the coupon curve to lock in returns for the next two years. In short, with the increased certainty of a near-term rate cut, primary market supply will be welcomed.”
At the end of trading, short-term Treasury yields approached their daily lows after the first sale of the week. The US Treasury Department will continue its bond sales this week, issuing $70 billion in five-year Treasury bonds on Wednesday and $44 billion in seven-year Treasury bonds on Thursday. The market is also waiting for key data due out later this week, including the latest economic growth report and the Fed's favored inflation indicator.
Canavan added that the strength of indirect bidding usually has a solid correlation with the demand for domestic investment funds, and it looks like investment funds may have been seeking entry before the expected interest rate cut later this year.
According to Oxford Economics, the data shows the biggest difference between expected yields and actual yields obtained by investors, highlighting the scale of demand for two-year Treasury bonds. At a time when the Fed is about to cut interest rates, money market funds totaling almost at an all-time high of $6.154 trillion are also a factor behind strong sales of two-year Treasury bonds.
He added that the situation will become clearer when the auction quota numbers are announced on August 7th. The award will create more clarity.
Investors are rushing to participate in the monthly two-year treasury bond issuance by the US Department of the Treasury, which strongly proves their confidence in the Federal Reserve's interest rate cuts starting this year.
Editor/Jeffy