Month in Review - May 2021
Markets were mixed in May with the TSX Composite Index rising 3.48% and the S&P 500 (in CAD) falling 1.61%. The Canadian Bond Universe Index finally rallied for its first monthly gain of the year, increasing 0.38% and the 10 Year Government of Canada Bond rate closing at 1.49%. With bond rates so low and now more correlated to stocks, we continue to use private debt and private real estate as an alternative to bonds for the safety portion of your portfolios Both focus on producing income month over month, and because they are private assets their prices do not fluctuate daily like stocks and bonds.
The biggest news for the markets came early in the month when the US Consumer Price Index number showed a big inflationary spike (see the chart below) Should the big move in the CPI continue without an increase in wages, then the middle and lower class face tougher times which will likely result in less discretionary spending over the long run and would be deflationary.