Inside Markets — Equity Demand and Macro Data

The reopened corporate buyback window has been a major source of equity demand over the last three weeks. A partially open April window resulted in the highest monthly pace of buybacks in over three years. Buybacks tend to accelerate after a pullback in equity prices with a still subdued IPO market likely to shrink the total supply of listed shares for a fourth consecutive year.

Fiscal expansion during Q1 may be an overlooked factor to help explain the resiliency message in hard economic data. According to the Treasury, the US government spend ~$2.4T during Q1’25, which is a ~15% YoY increase and much higher than the ~$1.7T spent in Q4’24. The increase in spending despite the administration’s goal is likely due to payment timing shifts and maybe even some front-loading ahead of tariff impacts.

The SPX still needs to clear and sustain levels above the 5750-5785 resistance zone (March high) to shift technical conditions to a low-volatility bullish trend. The CBOE Volatility Index (VIX) has moved back to more supportive levels near 22, which serves as our ‘elevated’ vs. ‘subdued’ demarcation zone. The SPX is currently in short-term overbought territory. We prefer to add equity exposure at short-term oversold levels but would respect a momentum-based break above obvious technical resistance.