The mid-month till now has seen less volatility compared to last months in both the real and financial world. Does that mean the worst is over in terms of surprises or there is a pause before the next wave of volatility?
May is taken as the month of selling position and moving on the sidelines in the financial world. And this May will bring enough reasons to do that.
First would be the Federal Reserve Bank meeting which is estimated to hike the rates by 50 basis points and start with an asset reduction plan. This has already sent the 10-year US bond yield to a crucial level of 2.8% and mortgage rates have already reached 5% which is an eleven-year high.
Then there is Victory Day in Russia on 9th May, this is very crucial as currently there are realignments to military operations in Ukraine. This could either lead to an aggressive second phase pre or post that day.
There is also an estimated higher temperature throughout countries that would drive power consumption, as it would be the first summer of return to the office for many. Even settlements of some European Gas contracts are due that if not paid in Rubles might lead to stoppage of deliveries.
And last but not least a crucial event is the Global Covid19 Summit mid-month. There are already surging cases observed in many countries. The last global covid wave was post COP26 and this might lead to another though it is virtual.
All this is due in the first of the May month while April's second half is seasonally positive. This may give a good window to realign portfolios or raise the amount of cash.