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Key Market Trends
Tip: This can be used as a guide for the short-term direction on key markets. A client of mine would call me almost daily to ask about the direction the markets were going. Here is a quick cheat sheet Knowing the market trend will help you understand what’s happening in the short-term.
Key Drivers of the Week June 28-2021
TIP – This is a 1-minute brief bullet-point summary. This tool gives investors and financial professionals a quick and simple list on what to look out for, and the main talking points of the week.
- Core central banks are talking about quantitative easing, but rate hikes remain a way off
- U.S. focus – jobs, ISMs, PMIs and housing data due
- Fedspeak from Williams Quarles Barkin Bostic and Barkin would change the outlook
- Canada GDP, trade and building permits are awaiting; Thursday is a holiday.
- Japan deluge: BoJ report, unemployment, retail sales, production, Tankan
- China Manufacturing PMIs: Korea Production and Hong Kong Trade Awaited
- Eurozone ESI confidence, manufacturing PMI, CPI, unemployment due
- Germany releases retail sales, HICP and jobless figures
- ECBspeak – Lagarde and Weidmann will stick to the script
- UK final Q1 GDP and current account.
- Switzerland has KOF, manufacturing PMI (and CPI) and CPI
All Good Things Will End, But Not This Week
On June 28, 2021
The major currencies are experiencing narrower ranges The pound has been the exception to the rule, posting modest gains in the early trading of the week. Cable rose from its Friday closing levels of around 1.3875 to make 1.3940. The UK currency has also risen above Friday’s highs against the euro.
The UK had some sensational news over the weekend. Health Secretary Matt Hancock quit after he was caught breaking his own lockdown regulations. But the news that really boosted the pound came from Hancock’s successor, Sajid Jarvid. He said he expects to approve the full reopening the UK economy on the 19th of July.
Media outlets also mentioned the close relationship Javid has with UK Chancellor Rishi-Sunak. In the UK, data is continuing to show a rise in Covid among younger adults who are not vaccinated, driven by the Delta strain. The absence of a companion is a sign that the person who speaks does not understand.
A rise in hospitalizations, and mortality which remains at basement levels.
However, In the stock and commodities markets, caution is prevailing amid turbulent times. A spike in Covid infections across East Asia is being driven by the highly transmittable Delta strain. Indonesia is experiencing record-breaking cases, Malaysia has extended its lockdown, while Thailand announced new regulations. Sydney, Australia is also on lockdown.
Treasuries fell on Friday, after trading that was choppy since the FOMC announced its pivot on June 16. The unwinding the flattening traded weighed on longer maturities. The 30-year bond dropped sharply on the Friday. It climbed over 5 bps, to 2,149%. The 10-year bond sold for 3.2 bps less at 1.52%. The 2-year had a fractional increase in value at 0.266%. The curve was 3 bps wider on Friday at 125 bps, compared to the previous Friday’s 118 bps. The stock market closed on a mixed note last week, with the Dow boosted by a reflation trade while the NASDAQ was weighed down by the spike in rates.
The stronger-than-expected rebound in the global economy and the faster than projected acceleration in inflation has caused central bankers around the world to start to discuss withdrawal of accommodation. Several emerging market countries have actually begun raising rates. It will be some time before the FOMC and ECB lift rates.
Sources reported some of the heavy selling in Treasuries was from rate locking ahead what could be a flood of bank issuance this week after the major banks easily passed very onerous stress tests with the major banks having sufficient capital to cover $470 bln in losses. The Fed removed Pandemic restrictions on Thursday also allowed dividends to be paid and shares to be bought back. Watch for positive movement in financial and bank stocks.
Fed Chair Powell said that the recovery was uneven and there were still enough downside risks, as well as noisy data to make policymakers cautious when they talk about unwinding QE in preparation for a tightening. This is especially true given signs of y/y inflation slowing. The economic data will determine the direction of policy, so releases will be closely watched. While none of the reports released in the near future will change the outlook of officials, they will all add to the evidence that will guide decisions.
Biden, key Democrats and others threatened to torpedo the Infrastructure Bill if it didn’t include $1 trillion plus in additional spending. “green” There are also special projects. Expect more as it approaches. “inflation” It is expected to grow even more.
We are facing a debt to GDP of 128.12%. This is causing inflation records. The scary part is that if we continue to spend at the same level, by 2025, our debt-to-GDP ratio will be 189% and the national debt will reach $50 trillion.
This week, the focus will be on Friday’s jobs report, when we expect the non-farm payrolls increase to 550k, up from the previous 559k. Other data on the week include June consumer confidence, along with the June ADP employment survey, June manufacturing ISM, housing data, and the May trade report.
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You can also find out more about the following: Advisor Market Intelligence Report Includes:
- Key Market Drivers – What is directly affecting markets?
- Index & Sector Trends – You can use this information to determine which areas or sectors are experiencing an upward or downward trend.
- Global Market Analysis – Get an overview of the US economy and the global economy.
- Stocks to Watch – Stocks with dividend income and high-quality blue chips to watch
- Economic Calendar – Discover what’s going on this week.
- Special Reports – Insider insights on inflation, tax bills and other key market factors.