It was green across the board this week for the TSP funds. Investors collectively jumped back into equities after a couple indecisive weeks of what inflation data means for the future. The S&P 500's (C-fund) 1.2% gain this week pushed the index into positive territory for the month of May marking four straight months of gains. There was a late sell-off to fall from the week's highs Friday but the weekly gains were not threatened. Small caps outperformed this week yet the S-fund fell short for May.
The economic recovery anticipated is really starting to show life as more people get vaccinated and the broader public settles back into their pre-pandemic lifestyle. That may have been particularly apparent this week ahead of a holiday weekend which usually starts the summer travel season for most Americans. The S&P 500 is trading just off its highs but at the same time is moving around a very familiar price range of the last couple months. Fear of inflation and its possible effect on monetary policy has become less of a concern with the greatest apparent threat would be the Fed slowing down its bond buying program according to the Fed minutes released last week.
The next Fed meeting is three weeks away and between then and now is another jobs report coming out next week. This will be following the disappointing jobs report of March. Its hard to say if investors prefer more bad new to deter monetary tightening or a good report signaling health in the labor market. Somewhere in the middle is likely the best fit; no surprises.
Bonds also produced some gains this week and it seems at the time being without much disturbance, both stocks and bonds are at comfortable prices.
Here are the weekly, monthly, and annual TSP fund returns for the week ending May 28:
The I-fund outperformed for the month of May and by a impressive amount. The I-fund was up 3.61% over the same time the C-fund added just 0.69%.
The SPY (S&P 500 / C-fund) had a great start to the week opening up just under the previous week's highs and mostly gaining ground from there. The action was a different character than the previous two weeks that had greater volatility and no consistent direction. This action itself may attract the more timid buyers who stay out of volatile markets. The problem though is there is not much room above before we are back into uncharted territory. The C-fund fund add 1.2% this week.
The Dow Completion Index (S-fund) has so far failed the expectations of a bear flag. The index moved above its 20 and 50-day EMAs and eventually ended Friday by closing an open gap from the beginning of the month. Is the bear flag still in effect or are when in a V-shaped comeback from early May action. The S-fund outperformed this week with a 2.52% gain yet fell short for a month of gains falling 0.66% for May.
EFA (EAFE Index / I-fund) nearly mimicked the action of SPY but a notable difference in this chart was it traded into new highs on Friday. The index did pull back from its highs Friday but remained to be a new closing high for the index. The I-fund produced a gain of 1.22% gain for the week but outperformed the month of May with a 3.61 % gain.
BND (Bonds / F-fund) made its move above its 50-day EMA where it traded above all week. The index did peak early and was not helped by inflation data but remained above the crucial 20 and 50-day EMA price. The 200-day EMA is within reach but will be a roadblock for many new buyers. The F-fund 0.34% for the week and month.
Good luck and thanks for reading. We will be back here next week with another TSP Wrap Up. You can read our daily market commentary at the Market Comments page. If you need more help deciding what to do with your account, perhaps one of our Premium Services can help.
Thomas A Crowley
www.tsptalk.com
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