According to BNY’s Bob Savage, global equities are registering another weekly gain, primarily led by the technology sector, despite rising oil prices and a stronger U.S. dollar—factors that typically exert downward pressure on equities. The U.S. stock market is on track for its best risk run-up since 2023, even as risk-off momentum accelerates, as evidenced by iFlow Mood reaching its weakest level since the 'Liberation Day' volatility episode in April 2025 [1].
Equity outflows have intensified overall, indicating that investors are pulling money from equities, while flows into core government bonds remain resilient, suggesting a flight to safety. The report highlights that changing correlations between asset classes are straining risk parity strategies, as stocks and bonds are increasingly moving together rather than offsetting each other [1].
Economic data presents a mixed picture: Japan’s April core CPI was reported as the lowest in four years, while German sentiment improved according to the May ifo survey. Additionally, news headlines provide mixed signals regarding a potential quick resolution to the U.S./Iran conflict, further contributing to market uncertainty [1].
The unofficial start of summer during the U.S. Memorial Day weekend is seen as a period for investors to reconsider their approach to geopolitical risks and 2026 investment strategies, given the current environment of shifting correlations and intensified risk-off sentiment [1].
CONCLUSION
Global equities are showing resilience with another weekly gain, led by technology, despite intensified outflows and heightened risk-off sentiment. Shifting correlations between stocks and bonds are challenging traditional risk parity strategies, prompting investors to reassess their portfolios amid ongoing geopolitical and economic uncertainties.