Key Points

  • U.S. equities continue to grind higher, setting records, with volatility remaining historically low. We continue to believe the bull market has legs, but investors should be aware that risks are elevated.
  • The labor market is tight, which could limit economic and profits growth, but should help to support the consumer. The Fed is likely to raise rates at the June meeting, but the market is looking for more clarity on the plans for the reduction of its balance sheet.
  • Global trade has picked up, which could contribute to further stock market gains, with a likely bias toward larger companies.