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Global equities jumped last week as markets anticipated that a US 2Q GDP contraction may foreshadow an end to the Fed’s aggressive hiking cycle. In the US, the S&P 500 ended the week up 4.28% as a majority of companies reporting have beat consensus earnings estimates. In Europe, the STOXX 600 climbed to a seven-week high and rose 2.97% with positive news from earnings offsetting the gloomy energy outlook. The FTSE 100 also digested the US GDP print favorably and closed the week up 2.06%. Read More
Oil prices fluctuated last week amidst a further reduction in Russian gas supply, rising recession concerns, and relatively stable demand. WTI and Brent crude ended last week higher at $98.62 and $110.01 per barrel, respectively, on the back of US supply constraints. Gold rallied last week following the Fed’s 75 bps rate hike, ultimately finishing up 2.09%. Read More
Global sovereign yields fell last week as expectations for aggressive central bank policies softened. The 10-Year US Treasury yield fell -14 bps to 2.64% on the back of the Fed’s rate hike and negative US GDP growth while the 2-Year yield fell -9 bps to 2.90%, continuing the 2s10s spread inversion. In Germany, the 10-Year Bund fell to two-month lows as recession fears grew over the EU’s emergency plans to curb gas usage. Read More
The US dollar depreciated -0.40% against a basket of currencies as investors digested the Fed’s rate hike, Chair Powell’s dovish comments, and the US economy’s second consecutive quarter of contractions. In Europe, the euro and pound sterling appreciated to $1.0220 and $1.2175, respectively, despite intensifying energy supply concerns fanning recession fears and expectations of a less aggressive ECB. Read More
The Fed made its second consecutive 75 bps interest rate hike last week, bringing the funds rate to 2.25-2.50% and marking the fastest tightening since the Fed battled double-digit inflation in the 1980s. The FOMC indicated that future hikes will be determined on a meeting-by-meeting basis, as inflation remains elevated and recent indicators of spending and production have softened while job gains have been robust and unemployment has remained low. Read More
The Fed’s preferred inflation measure, core PCE, rose 4.8% YoY in June, above consensus expectations and the prior print of 4.7%. In Europe, Euro area flash HICP rose 8.9% YoY in July, above consensus expectations of 8.7%, on the back of broad-based pressures from energy, food, industrial goods, and services. We expect price pressures to remain elevated throughout the year, with particular focus on the supply of Russian gas. Read More
The US economy shrank by more than expected to -0.9% annualized in 2Q 2022 on the back of a decrease in inventories and slowing spending and investment. The print marked the second consecutive negative GDP quarter, meeting a shorthand definition of recession. However, strength in other recession indicators, such as employment, may prevent the National Bureau of Economic Research from officially declaring a recession during the first two quarters of 2022. In the Euro area, 2Q GDP grew 0.7% YoY, above consensus expectations of 0.1% and reflecting a stronger-than-expected post-Omicron rebound. We expect to see a modest downturn as growth moderates in the second half of the year. Read More
US Initial Jobless Claims fell 5k to 256k for the week ending July 23, breaking a three-week streak of increases. Read More
For US Fixed Income, Government, Corporate, and High Yield refer to the Bloomberg US Treasury, the Bloomberg US Corporate Credit, and the Bloomberg US High Yield indices, respectively. For European Fixed Income, Government, Corporate, and High Yield refer to the Bloomberg Euro Treasury Index, the Bloomberg Euro Corporate Index, and the Bloomberg Euro High Yield Index, respectively. Short, Intermediate, and Long refer to the Short, Intermediate, and Long segments of their respective curves. Quality returns refers to the credit quality of asset classes ranging from Government, highest quality, to High Yield, lowest quality. Since August 24, 2016, the Barclays indices are co-branded “Bloomberg Barclays indices”.
Euro area Manuf. PMI (Cons: 49.6, Prior: 49.6)
UK Manuf. PMI (Cons: 52.2, Prior: 52.2)
Euro area Unempl. (Cons: 6.6%, Prior: 6.6%)
ISM Manuf. (Cons: 52.0, Prior: 53.0)
US JOLTS (Cons: 11.000M, Prior: 11.254M)
Euro area Composite PMI (Cons: 49.4, Prior: 49.4)
US Services PMI (Cons: -, Prior: 47.0)
ISM Non-Manuf. (Cons: 53.5, Prior: 55.3)
BoE Rate Decision (Cons: 1.50%, Prior: 1.25%)
US IJC (Cons: 255k, Prior: 256k)
Nonfarm Payrolls (Cons: 250k, Prior: 372k)
US Unempl. (Cons: 3.6%, Prior: 3.6%)
“Euro area Manuf. PMI” refers to Markit Eurozone Manufacturing Purchasing Managers’ Index. “UK Manuf. PMI” refers to the United Kingdom Manufacturing Purchasing Managers’ Index. “Euro area Unempl.” refers to the Euro area Unemployment Rate. “ISM Manuf.” refers to the US Institute for Supply Management’s Manufacturing Index. “US JOLTS” refers to the US Job Openings and Labor Turnover Survey. “Euro area Composite PMI” refers to the Markit Eurozone Composite Purchasing Managers’ Index. “US Services PMI” refers to the Markit US Services Purchasing Managers’ Index. “ISM Non-Manuf.” refers to the US Institute for Supply Management’s Non-Manufacturing Index. “BoE Rate Decision” refers to the Bank of England’s interest rate decision. “US IJC” refers to the number of people filing to receive unemployment insurance benefits for the week ending July 30. “Nonfarm Payrolls” refers to US Nonfarm Payrolls. “US Unempl.” refers to the US Unemployment Rate. “ECB Meeting” refers to the European Central Bank’s meeting. “BoE Meeting” refers to the Bank of England’s Monetary Policy Committee meeting. “FOMC Meeting” refers to the Federal Reserve’s Federal Open Market Committee meeting.
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