Macroeconomic/ geopolitical developments
- A 0.5% hike by the Fed as expected, but Jerome Powell stated that a hike of 0.75% was “not something we are actively considering.”
- Stock indices initially rallied strongly on this information Wednesday, then reversed these gains and more on Thursday and Friday.
- Friday’s US Jobs reports saw 428K jobs added in April, slightly above consensus of around 390K, but the prior months’ gains were revised lower by almost the same gap (39K).
- US 10yr yields broke up through the psychological 3% barrier.
- The Bank of England (BoE) hike rates by 25 basis points to 1% on Thursday as expected, but has delayed quantative tightening, so a slightly dovish hike.
- Pandemic lockdowns in China continue to weigh on domestic growth potential and increase global supply chain and inflation worries.
Global financial market developments
- Growth/ tech stocks lead US stock averages lower again, in some instances to new 2022 lows.
- Global stock averages were also lower last week, although European and UK indices are still outperforming their US counterparts.
- US 10yr yields broke up through the psychosocial 3% barrier as US and global bonds move to new high yields.
- US Dollar strength has stalled slightly, through the greenback stays strong across the board.
- Gold sold off further, staying more negative.
- Oil moved still higher, reinforcing a positive range environment.
- Copper plunged still lower for a still more negative tone.
Key this week
- Geopolitical focus:
- Victory Day in Russia, watching for comments from Putin
- Still closely monitoring the war in Ukraine
- Central Bank Watch: A light week for Central Banks, we just get the Bank of Japan (BoJ) Meeting Minutes on Monday
- Macroeconomic data: A light week for data, but some big standouts with release Wednesday of the Chinese, German, and US CPI data.
|Date||Key Macroeconomic Events|
|09/05/22||BoJ Meeting Minutes; Victory Day in Russia|
|10/05/22||German ZEW Survey|
|11/05/22||China CPI; German CPI; US CPI|
|12/05/22||UK GDP, Industrial and Manufacturing Production; US PPI|
|13/05/22||US Michigan Consumer Sentiment Index|