US stocks averages hit record levels, ECB and BoC cut, US CPI and Fed now in focus

Macroeconomic/ geopolitical developments

• U.S. stocks rallied with the Dow, S&P 500, and Nasdaq all posting gains, fueled by a significant rise in Nvidia’s stock and investor optimism for potential Federal Reserve rate cuts. Bonds moved to lower yields through the week, but recoiled to higher yields on Friday after the US Jobs data.
• The U.S. labour market’s unexpectedly strong job creation and wage growth in May have reduced the likelihood of the Federal Reserve cutting rates in September, shifting market expectations for rate cuts to later in the year.

• The European Central Bank and the Bank of Canada have diverged from the U.S. Federal Reserve’s steady rate stance by cutting interest rates this week, reflecting differing strategies in response to domestic inflationary trends and marking a new era in global central bank policy.

• Investors will closely monitor the US Federal Reserve’s policy meeting and the release of key inflation data, the US Consumer Price Index for May this coming week, as these events will provide critical insights into potential shifts in economic projections and future monetary policy.

Global financial market developments

• US and global equity averages rebound, many at new record levels
• US and European bonds move to lower yields, before recoiling to higher yields Friday
• The US Dollar Index dipped, before surging higher Friday
• Gold futures plunged Friday after a week of consolidation.
• Oil futures sold off, then bounced

Key this week

Central Bank Watch: The main central bank activities this week is the FOMC Interest Rate Decision and Policy Statement on Wednesday. One other release of note is the Bank of Japan Interest Rate Decision and Policy Statement on Friday.

Macro Data Watch: The main macro data release this week is the US CPI data on Wednesday. Other releases of note are the UK Employment report on Tuesday, UK GDP data, Chinese and German CPI data on Wednesday, then US PPI data on Thursday.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued