The first week of April 2024 saw a shortened trading period due to the Easter weekend, but that didn't prevent markets from experiencing volatility as investors grappled with competing views on the state of the global economy and the trajectory of interest rates.

At the heart of the market's indecision is the push and pull between the potential for fiscal stimulus in this U.S. election year and the question of whether the economy, particularly in the U.S., is already strong enough to stand on its own. With a resilient consumer and signs of improvement in the industrial sector, some are wondering if this is what Goldilocks looks like.

However, this presents a conundrum for markets. Interest rates have already risen significantly, and investors are hoping for rate cuts later in the year. But if the economy remains robust, it may be difficult to justify such cuts. Comments from Fed committee members mid-week poured cold water on the prospects for multiple rate reductions, a sentiment that weighed on markets given the implications for asset valuations in a higher rate environment.

By the end of the week, though, surprisingly strong U.S. wage data painted a picture of an economy still charging ahead. Paradoxically, markets rose on this news despite the implication of further upward pressure on rates, perhaps a reflection of thin trading volumes.

Emerging markets, including China, were less volatile, while the Nasdaq saw a round trip, ending down a few percent before rebounding. The Russell 2000 finished the week off around 2%. Internationally, the UK held steady, Europe and Australia slipped a few percent, and Japan was among the weakest performers, likely due to volatility in the yen amid shifting monetary policy expectations.

Rates, while not as jumpy as one might expect, still managed to creep higher, with a notable 20 basis point rise across the US yield curve signaling a "higher for longer" outlook on inflation and rates.