Markets have been broadly rangebound over the last couple of weeks but risk sentiment received a boost from Friday's Non-Farm Payrolls data out of the US. The US economy added 569k jobs in May, this was lower than expectations of 650k but the unemployment fell to 5.8% - dipping below 6% for the time since March 2020. The labour force participation rate held steady and Average Hourly Earnings exceeded expectations, gaining 0.5% from the prior month. Equities promptly traded up close to record highs with Tech leading the gains. A potential G7 tax deal announced over the weekend will also boost US fiscal revenues if implemented in the coming months.
Fixed Income was bid as well with yields globally moving lower. The US 10Y fell below the 1.6% mark once again and market expectations of inflations tempered a bit too. Crypto has struggled to sustain any momentum of late and news out of China over the weekend about Weibo banning certain crypto linked accounts have fueled speculation of an impending regulatory crackdown. Bitcoin's recent support level of around 36k seems to be holding for now.Crude has been a steady gainer as WTI is almost at the 70 levels now, with OPEC+ calling the shots. The increase comes despite a planned increase in global production of close to 2 mn barrels a day, mostly owing to inventories falling below historical median levels and the global vaccination drive expected to bring economies back online soon.After the flurry of data out last week, we have a calmer week on the economic front. Central Banks from Canada and the Eurozone are expected to hold on to their upcoming rate decisions this week, while Russia is expected to hike 25 bps to 5.25%. The positive developments around the vaccination drive are expected to feed into the sentiment surveys as well, keeping risk sentiment buoyant for now.
June 7, 2021
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