Hey Folks, markets do not seem to be able to hold any long term upside rallies with more sellers pushing prices lower. Get my take in this week’s market round-up.
WEEKLY SOUND BITES:
The major indexes all moved lower as Indexes surrendered a portion of the previous week’s strong gains as investors continued to question whether the Federal Reserve will be able to rein in inflation without causing a recession.
The week’s economic data did little to support worries of an impending recession—particularly one driven by layoffs. On Friday, the Labor Department reported that employers added 390,000 nonfarm jobs in May, well above consensus expectations of around 320,000 while weekly jobless claims, reported the day before, surprised modestly on the downside and April job openings remained slightly below record highs at 11.4 million. Consumer confidence fell in May as workers grew somewhat less enthusiastic about their job prospects, with modestly more Americans saying that jobs were “hard to get.” The ISM’s gauge of services sector activity fell more than expected and hit its lowest level in over a year while the ISM’s manufacturing data showed a surprising acceleration in manufacturing activity in May.
The signs of slowing inflation and speculation about a possible Fed pause, U.S. Treasury yields increased substantially during the week, with the benchmark 10-year U.S. Treasury note yield rising from 2.74% the previous Friday to roughly 2.96%.
Inflation in the 19 countries comprising the euro area accelerated more than expected in May to another record high of 8.1% and spread more broadly across the economy. European Union (EU) leaders agreed at the end of the month to ban all seaborne Russian oil deliveries, covering about two-thirds of such imports, within months. Meanwhile, Russia’s state-owned energy company Gazprom cut off gas to the Netherlands, the fourth country to be sanctioned for refusing to pay in rubles rather than dollars. Many policymakers are now agreed on the need to start raising rates to curb inflation, but they are divided over the pace of tightening, with some calling for an increase of 50 basis points in July. The ECB’s key deposit rate is -0.5% and has been negative since 2014.
While short-term inflation expectations in Japan have increased—and the rising prices of daily necessities could hurt household sentiment, according to Bank of Japan (BoJ) Governor Haruhiko Kuroda—medium- to long-term inflation expectations are still low. Composite PMI data showed a moderate rise in private sector activity in May, led by growth in the larger services sector, where an easing of pandemic restrictions helped boost demand.
China’s government unveiled more details of the stimulus programs it announced the previous week, with 33 measures covering fiscal, financial, investment, and industrial policies causing their markets to rally. Meanwhile China’s factory activity shrank less sharply in May as virus restrictions eased and some production resumed, according to a private sector survey. China’s PMI rose to a stronger-than-expected 48.1 in May from 46.0 in April, when it hit its lowest level in 26 months.
Enjoy this week’s Round-Up:
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
