U.S. Equity Markets reversed all of Tuesday’s gains to close lower, led by the 1.08% fall in the S&P. Incredibly, the VIX also closed lower by 0.25% at a price of 23.96. According to data from the U.S. Federal Reserve, April’s total Consumer Credit balance rose 10% on an annualised basis to $38.1 billion compared with March’s $47.3 billion. The expansion of revolving credit, which includes credit-card debt, jumped 19.6% to $17.8 billion over the same period versus March’s $25.6 billion. This brings the total amount of revolving credit outstanding to $1.1 trillion dollars… which implies households are using credit debt to expand their paychecks amid rapidly rising inflation and the strain that it is putting on personal finances. But while this may help over the short term, the costs will eventually catch up. Unless inflation begins to ease, interest payments for credit cards are likely to trend even higher – increasing the risk of default among individuals and signalling the potential for a credit bubble. Within the S&P 500, 10 of the 11 sectors finished lower, making the move lower in the VIX a complete anomaly. European Markets closed lower. Russian Foreign Minister Sergey Lavrov is in Turkey to begin two days’ worth of negotiations to establish a corridor for the transport of Ukrainian grains. The World Bank lowered its global growth forecast for 2022 from 3.2% to 2.9%, saying a recession will be hard for many countries to avoid due to rising inflation. The Organisation for Economic Cooperation and Development lowered its 2022 global growth outlook from 4.5% to 3%, citing fallout from the conflict in Ukraine. German Industrial Production growth for April was weaker than anticipated as construction activity declined. In Asia, China’s government has raised $10 billion for a new stability fund to prop up financial institutions in the event of an economic collapse, with plans to raise $100 billion by September. Japan’s final First-Quarter Gross-Domestic-Product data was revised higher, contracting less than initially thought, signalling the economy may already be starting to recover. Chinese state-run media outlet Economic Daily said local governments should do more to boost private business investment and spur economic growth. Japanese Prime Minister Fumio Kishida’s Cabinet approved a preliminary plan to significantly bolster the island nation’s military defenses over the next five years. Elsewhere, Oil rose 2.64% on news of China’s gradual reopening, while Gold closed flat.
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