Single events generally don’t have much impact on mid- and long-term financial market performance. But this week could have some significance, at least for mid term performance. Some of the largest companies in the world report earnings this week, including big tech companies like Apple, Amazon, Google parent Alphabet, Microsoft, and Meta Platforms. There was also the latest data on home prices (US) on Tuesday, with the Case-Shiller National Home Price Index for February, along with new and pending home sales for March. On Thursday, the Bureau of Economic Analysis will release its advance estimate for first-quarter GDP. Also, we can expect consumer sentiment readings from the Conference Board and University of Michigan. On Friday, we’ll receive a key update on inflation with the Personal Consumption Expenditures Price Index—the FED’s preferred inflation gauge—for March.

Here is why that is more important for markets this time around. Financial Markets continue to trade firm, with stocks and bonds are up nicely as you can see in the graph. Bitcoin has clearly been the best performing asset this year but should still be treated separate from the other assets, considering the lack of regulation around it. US Mega Large Caps, many of them reporting earnings this week, have been the real leader of the uptrend this year. Overall however, markets are in somewhat of a holding pattern, waiting for signals to determine the near future path. The US banking crisis is still not done yet but didn’t unravel the markets because of government and big banks interference. Earnings and guidance have all the attention now and had a good start with GM, Microsoft and Alphabet. Attention will then shift to the FED. While it’s clear that they will go through with their next scheduled rate hike, the tone for going forward will be much more impactful for markets. Debates about the debt ceiling have always been a favourite tool of the opposition and will intensify soon.

While that recession, the whole world has been predicting, is still possible and a worldwide economic slowdown is inevitable, indicators of a soft landing are on the rise. Inflation may not be residing for the consumer yet, but you can see on the graph that commodities have started to come down. That is usually an indicator of a deflationary period starting. The way markets will perform for the rest of the year is still a toss up and caution should be exercised, but it’s still a good market to be in. Just be diversified and have lots of bonds in your portfolio.