[Platinum Insights] (6.9.23)

Good Friday Morning.  

U.S. stock index futures slipped on Friday, a day after the benchmark S&P 500 marked a 20% rally from lows, while inflation data and U.S. monetary policy decisions are due next week.  

The Nasdaq and S&P 500 have notched new year-to-date highs in recent sessions, boosted by an AI-driven rally in megacap stocks, a better-than-expected earnings season and expectations that the Fed is nearing the end of its rate-hiking cycle.  

The narrow breadth of the S&P 500’s rally has been a concern for some investors, with just seven stocks – Alphabet, Apple, Microsoft, Amazon, Meta, Nvidia and Tesla – responsible for almost all of the index’s gains this year.  

Signs of a resilient U.S. economy and hopes of the Fed pausing its aggressive monetary tightening have pushed volatility gauges tumbling. The CBOE Volatility index, commonly known as Wall Street’s fear gauge, sank to a fresh pre-pandemic low of 13.53 points on Thursday.  

Cash funds saw $70.6 billion of inflows, BofA said, citing EPFR data, on Friday. Inflows to cash so far this year have reached $837 billion, almost as much as record $917 billion in the whole of 2020.   

Tech funds had their first weekly outflow ($1.2 billion) in eight weeks, after a record $8.5 billion inflow the week before, due to a surge of investor interest in stocks with exposure to artificial intelligence. Data from Refinitiv Lipper showed investors withdrew a net $18.84 billion from global equity funds, the largest weekly net selling since March 15.  

“With policy rates peaking and risks to the economic outlook increasing, we recommend adding exposure to bonds and locking in yields before markets begin to price in much lower interest rates,” Mark Haefele, chief investment officer at UBS, said in a note.  

WTI crude futures fell to around $71 per barrel. Gold steadied above $1,960 an ounce while the yield on the US 10-year Treasury note briefly touched 3.82% before dropping to 3.75%. 

Have a great weekend!