What a difference a week makes. During May, the S&P 500 was down every week and last Friday, 31 May, it lost 1.32%. Fast forward to this week and the market pops and has its best weekly performance since last November, as the S&P 500 closed at 2873. Fed Chair Powell\'s interest rate cut comments on Tuesday gave the markets a boost. Friday’s reports that May wage growth slowed and only 75,000 jobs were added, which was well below expectations, sent speculation soaring of a summer interest rate reduction. In fact, this week the 10 year Treasury yield continued to trend lower. For TSP TIPS, after Tuesday’s rally we did receive an email from a subscriber regarding the Trending Investment Portfolio Strategy (TIPS) versus a Buy and Hold strategy. Since some of you might have a similar thought, we’d like to share our reply from the following day. What we found out was that we essentially wound up at the same end point, but the paths were different. On 11 May, TSP TIPS recommended a reduction in the equity (C/S/I) allocation and an increase the bond (F) allocation. Since equities were trending lower the last half of May while the lower interest rate environment resulted in the F fund hitting new record highs (including Friday), this week’s market rally made up for that Buy and Hold “lost ground” during that period. Kind of like the "The Tortoise and the Hare" fable, a matter of volatility. So what is next? While technical analysis will determine our final recommendation, usually these short-term bullish runs exhaust themselves quickly and a reversal occurs. And let me go back to the top of this update where it was mentioned that the market had its best performance since November. It should also be noted that last November was an extremely volatile month, followed by December’s 2018 lows.
What a difference a week makes. During May, the S&P 500 was down every week and last Friday, 31 May, it lost 1.32%. Fast forward to this week and the market pops and has its best weekly performance since last November, as the S&P 500 closed at 2873. Fed Chair Powell\'s interest rate cut comments on Tuesday gave the markets a boost. Friday’s reports that May wage growth slowed and only 75,000 jobs were added, which was well below expectations, sent speculation soaring of a summer interest rate reduction. In fact, this week the 10 year Treasury yield continued to trend lower. For TSP TIPS, after Tuesday’s rally we did receive an email from a subscriber regarding the Trending Investment Portfolio Strategy (TIPS) versus a Buy and Hold strategy. Since some of you might have a similar thought, we’d like to share our reply from the following day. What we found out was that we essentially wound up at the same end point, but the paths were different. On 11 May, TSP TIPS recommended a reduction in the equity (C/S/I) allocation and an increase the bond (F) allocation. Since equities were trending lower the last half of May while the lower interest rate environment resulted in the F fund hitting new record highs (including Friday), this week’s market rally made up for that Buy and Hold “lost ground” during that period. Kind of like the "The Tortoise and the Hare" fable, a matter of volatility. So what is next? While technical analysis will determine our final recommendation, usually these short-term bullish runs exhaust themselves quickly and a reversal occurs. And let me go back to the top of this update where it was mentioned that the market had its best performance since November. It should also be noted that last November was an extremely volatile month, followed by December’s 2018 lows.