Hey Folks, in this holiday shorten week for North American markets we saw Volatility come back into play. The key question most want to know is where to from here. Get my thoughts on the current market price action below;
- U.S. equities retreated over the shortened trading week—markets were closed on Monday in observance of Labor Day. Several factors weighed on sentiment, including September’s reputation for being a weak month for stocks. The previous week’s significant August payrolls miss seemed to linger in the minds of investors and exacerbate worries that the delta variant of the coronavirus was slowing the economic rebound. Meanwhile, Treasury Secretary Janet “Aunt Bee” Yellen said that extraordinary measures to avoid breaking the congressionally mandated federal debt ceiling were likely to be exhausted in October and reiterated her plea for legislators to take action. Inflation worries may have continued to weigh on sentiment. Also, for this past week Wall Street Banks slashed Q3 GDP forecasts down to 3.5% from 5.25% while the Feds Beige Book indicated that downshift began in August. Also troubling is that over 41% of US Households uses some form Gov assistance to pay usual expenses.
- On Friday, stocks appeared to slip after the Labor Department reported that producer prices rose 0.7% in August, a slowdown from July’s 1.0% gain, but above consensus expectations for a 0.6% increase. The tight labor market signaled further profit margin challenges for firms. According to the Job Openings and Labor Turnover Survey (JOLTS) data released Wednesday, there were a record 10.93 million positions waiting to be filled in July, almost 1 million more than consensus estimates. Weekly jobless claims also fell more than forecast to a new pandemic-era low of 310,000.
- The Friday morning’s producer price data appeared to reverse a downward trend in the yield on the benchmark 10-year U.S. Treasury note, leaving it modestly higher for the week. The high yield market was also fairly quiet, as concerns over economic growth and the Federal Reserve’s eventual tapering of its monthly asset purchases contributed to a weaker economic backdrop.
- The ECB said, after its latest policy meeting, that it had decided to move to a “moderately lower pace” of bond purchases under its Pandemic Emergency Purchases Program for the rest of the year, after a rebound in European growth and inflation. The ECB also raised its forecast for 2021 economic growth to 5.0% from 4.6% and its inflation projection to 2.2% from 1.9%. The central bank’s projections showed inflation peaking at 3.1% in the fourth quarter and then slowing to 1.7% in 2022 and 1.5% in 2023.
- Japanese equities extended their gains over the week, buoyed by political optimism and expectations of further fiscal stimulus under a new prime minister, following the decision by current Prime Minister Yoshihide “Sugar” Suga to step down. Second-quarter gross domestic product growth was revised up to an annualized 1.9% from a preliminary reading of 1.3%. The main driver was an upward revision to government consumption.
- Chinese stocks rose for the third straight week. China’s merchandise exports in August increased 25.6% over a year earlier, while imports climbed 33.1%, according to the country’s statistics office. Inflation data continued to show elevated producer prices and subdued consumer prices. The producer price index (PPI) rose 9.5% in August from a year ago mostly due to higher commodity prices that have been a major driver of factory gate inflation this year. August’s PPI reached a 13-year high.
Enjoy this Week’s Round-Up;
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