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In The Spotlight
In The Spotlight
In The Spotlight
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US equities rallied last week, as the bill to raise the debt ceiling was voted into approval ahead of the June 5th deadline. Strong labor prints, such as nonfarm payrolls marking the 29th straight month of positive job growth, also lifted the S&P 500 1.88% higher. In the Euro area, a slowdown in the Chinese manufacturing sector in conjunction with weak oil demand renewed investor fears of a global growth slowdown, further weighing on equities. Ultimately, the STOXX 600 and FTSE 100 ended 0.27% and –0.17% lower, respectively. Read More
Oil prices fell last week, driven by sluggish demand from China. The impact of China’s weak factory activity prints outweighed a decline in interest rates, driving WTI and Brent crude lower to $71.74 and $76.13/bbl, respectively. Meanwhile, gold prices ended higher last week at $1969.60/troy oz amid growing dovishness among market participants around the Fed’s June policy rate decision. Read More
US Treasury yields declined last week on the back of mixed economic data. Early last week, markets priced a two-thirds chance that the FOMC would raise rates at its upcoming June meeting, but rhetoric from Fed officials and a manufacturing PMI print in contraction for its seventh consecutive month both contributed to futures markets pricing in a pause. Ultimately, the 2-Year and 10-Year US Treasury yields closed at 4.50% and 3.69%, respectively. Read More
The US dollar rose to a 10-week high before ultimately depreciating –0.38% against a basket of currencies as investors grew more confident of a Fed “skip” in June. Meanwhile, the euro and pound sterling appreciated to $1.0711 and $1.2452 amid consensus expectations for further policy tightening by both the ECB and BoE. The yen rebounded from a 6-month low against the dollar to end the week at ¥139.94 as the BoJ held an emergency meeting to address the currency’s decline. Read More
US labor market data was strong last week, with nonfarm payrolls rising by 339k, above consensus expectations of 195k. The print extended a record streak where the increase came in greater than consensus expectations, now at 14 months and reflective of continued labor market resilience. US initial jobless claims increased by 2k to 232k in the week ended May 27, below consensus expectations for a 5k increase. The four-week moving average, which smooths out volatility, fell lower by 2k to 230k. Lastly, the unemployment rate increased from 3.4% to 3.7%, driven in part by more people entering the labor force. While labor market strength is supportive of growth, it raises the risk of a more hawkish Fed. Nonetheless, we expect the FOMC to hold their policy rate at its current level in June. Read More
US nonfarm productivity fell –2.1% in Q1, more than consensus expectations. Similarly, economic activity in the manufacturing sector contracted for the seventh consecutive month, with the ISM manufacturing index falling by –0.2 pp to 46.9 in May. In China, the headline Caixin manufacturing PMI rose to 50.9 in May from 49.5 in April, suggesting an expansion in activity despite the recent soft patch in China’s economic data. Surveyed companies indicated that the expansion in production was supported by a rise in overall new business amid firmer client demand. Read More
Euro area inflation data last week confirmed that the disinflationary process was under way, with headline and core inflation falling to 6.1% and 5.3% YoY, respectively. The breakdown by main expenditure categories showed that services inflation fell –0.2 pp to 5.0% YoY, and non-energy industrial goods inflation fell –0.4 pp to 5.8% YoY. 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”.
US Services PMI (Cons: 55.1, Prior: 53.6)
US ISM Non-Manuf. PMI (Cons: 51.8, Prior: 51.9)
UK Composite PMI (Cons: 53.9, Prior: 54.9)
UK Construction PMI (Cons: 51.0, Prior: 51.1)
Euro area Retail Sales (Cons: 0.2%, Prior: –1.2%)
Germany Industrial Production (Cons: –1.3%, Prior: –3.4%)
Euro area GDP (Cons: 0.0%, Prior: 0.1%)
“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. “Composite” refers to both manufacturing and services sectors. “GDP” refers to gross domestic product. “FOMC” refers to Federal Open Market Committee. “ECB” refers to European Central Bank. “BoJ” refers to the Bank of Japan. “BoE” refers to the Bank of England.
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