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Weekly Economic & Financial Commentary: Growing Pains: Extended Lead Times, Supply Chain Constraints, Difficulty Finding Labor

Summary United States: Growing Pains: Extended Lead Times, Supply Chain Constraints, Difficulty Finding Labor The unmistakable message delivered in this week's data is that the U.S. economy could be growing even faster were it not for limited access to essential raw materials and labor. The April jobs report was a...

Week Ahead: Coronavirus and Inflation Will Take Center Stage as Jobs Numbers are Pondered

Traders will be watching CPI and PPI from both China and the US Unless there is a prominent central bank interest rate decision, the second week of a month tends to slow down in terms of economic data.  That is indeed the case this month.  The pace of the re-openings...

Week Ahead – Dollar Declines after Massive Payrolls Miss; Focus Shifts to Inflation

Wall Street went on a wild ride after a huge nonfarm payroll report miss reaffirms the Fed’s stance to do nothing. A massive slowdown in hiring was not expected and the knee-jerk reaction across the bond market might have paved the way for further dollar weakness. The US economic...

Sunset Market Commentary

Markets Today’s most eye-popping development came at the start of EU dealings on EU rate markets. Curves rapidly started bear steepening, lifting long term yields to fresh recovery highs. The German 30-yr yield even tested the 2020 high (0.38%) for a first time. In absence of eco data – apart...

Week Ahead – BoE and RBA Rate Decisions in Focus; US April NFP Report Could Show Over a Million Jobs Created

Everyone on Wall Street is trying to figure out if the peak in Treasury yields will stick for a while now that the US is approaching peak growth. The best expansion since World War 2 is being accompanied with a Fed that remains committed to supporting the economy until...

Weekly Focus – Central Banks Remain in Wait-and-See Mode

The global Covid-19 situation remains challenging. New global coronavirus cases rose for a ninth consecutive week by a record 5.7 million, as a 52% surge in India outweighed declines in most regions. Still, on a positive note the vaccination drive in Europe is picking up pace and the US...

Week Ahead – Fed to Stay the Course, Huge Earnings Week for Big-Tech, and OPEC+ Meets

Wall Street could see more volatility during a very busy trading week that is filled with a wrath of central bank decisions, surging international COVID-19 cases, solid economic data, effects of stimulus working its way through the economy, and pent-up consumer demand. Financial markets are edge, especially considering how...

ECB Eyed As India’s Unwanted Covid-19 Record Hurts Crude Oil

India epicentre of Covid - bad news for crude and INR ECB's Lagarde likely to remain dovish Fed to follow footsteps of BOC? The US markets rallied sharply yesterday to erase losses suffered on Tuesday, lifting foreign currencies and metals as the dollar sold off amid the risk-on trade....

Sunset Market Commentary

Markets The long end of the European yield curve took off where it left on Friday: rising and underperforming against the US. The EU 10y swap rate trades north of 0.10% for only the second time since March 2020, trying to force a break higher out of a closing triangle...

Week Ahead: Bank of Canada to Reduce Purchases; Global Economic Recovery to Pickup

The global economic recovery is gaining momentum as the world’s two largest economies continue to deliver robust economic readings. China’s economy grew 18.3% in the first quarter, a record rate that sets the example of what we can expect as the rest of the world recovers from COVID-19. The...

Weekly Economic & Financial Commentary: More Evidence of Economic Recovery

U.S. Review More Evidence of Economic Recovery Data released this week continue to show that the economic recovery is gaining momentum. The much anticipated consumer boom has arrived, helped by an influx of stimulus in March, and industrial production rebounded from its partly weather-induced February decline. But supply chain constraints...

Week Ahead: Fed’s Inflation Calm About to Get Tested

The Fed has clearly signaled they are not worried about inflation and that should worry financial markets. The Fed has repeated that inflation will be transitory, but financial markets have never seen this record amount of stimulus get pumped into the economy. The US economy is about to run...

Rotational Spin

US markets paused for breath overnight, with Wall Street easing slightly after a frenzied Monday session. Rotational spin was the theme of the day, and yesterday's lucky recipient was the European Union, with markets delivering the author a slap in the face after yesterday's note. Having driven US markets...

Weekly Economic & Financial Commentary: Activity Marches Higher

Summary U.S. Review: Activity Marches Higher The improving public health position led to an easing of restrictions and pickup in activity across the country in March. Data this week show an economy set to fire on all cylinders. The daily vaccination pace continues to improve, employers added an impressive 916K...

Week Ahead: US Jobs Hiring Spree Suggests Reflation Trade is Back

Country US The US economy is about to run hot as a hiring spree has officially started.  The dollar may have got its groove back as Treasury yields are rising again.  It will take several months of massive job gains to alter the Fed’s stance, so investors can feel confident that...

Week Ahead: Has the US Economic Boom Been Mostly Priced in?

Vaccine rollout success in the US has Wall Street quickly pricing in rapid growth during the recovery stage. The trend in daily new cases is rising in the US but the successful vaccine rollout will make any sharp accelerations short-lived. The Biden administration is vaccinating 1.2% of all adults...

Week Ahead: Financial Markets Remain Fixated with Bond Market Moves and Brace for Lots of Central Bank Speak

The focus for the upcoming week will stay with the bond market.  Financial markets are worried with how high Treasury yields can go.  Treasuries have declined for seven straight weeks and that has triggered been the primary driver for US dollar strength. Monday is the start of the Bank of...

Week Ahead: Rising Treasury Yields Will Make this an Interesting FOMC Decision

The bond market seems determined to make this an interesting FOMC policy decision. Treasury yields have been surging after the Biden administration passed the $1.9 trillion COVID relief bill and set a May 1st goal of getting vaccines to all adults. The Fed welcomes a steeper yield curve, but...

Week Ahead: Dollar Rally Continues as US Yields Rise

The taperless tantrum could continue across financial markets now that it seems clear Fed Chair Powell won’t react until he sees disorderly market conditions or if financial conditions tighten further. Positive economic, such as this past employment report might continue to fuel optimism about the economic outlook and that...

Week Ahead – Rising Yields Spook Markets

Powell fails to ease concerns Everyone is watching the bond markets at the moment, as yields accelerate higher and investors become increasingly anxious. That is dominating the headlines and it’s unlikely to change next week, with the jobs report on Friday now even more significant. Country US It seems Wall Street is much...

Weekly Economic & Financial Commentary: Q4 GDP Data Top Expectations, but Q1-2021 Looking Shakier

U.S. Review A Consumer and His Stimulus Check Are Soon Parted Stimulus checks from the year-end COVID-relief package arrived in January, and we learned this week that retailers raked in more money during that month than they have since June. Every single store category reported increasing sales during the month....

Week Ahead – Powell to the Rescue

Rising yields spook investors Jerome Powell’s appearances in Congress next week may come at the perfect time. Rising yields have made investors nervous and the Fed Chair may be the person to put their minds at ease. Meanwhile, Boris Johnson will lay out plans for the easing of the lockdown...

Follow The Leader

Apart from being another year older, not much has materially changed in the world over the weekend from my perspective. Markets remain target fixated on the Biden stimulus and vaccine rollouts as the magic panacea for the world's pandemic ills. With the world awash with liquidity looking for a...

Week Ahead – Cause for Optimism

Minutes and PMIs eyed Investors are growing increasingly hopeful about the economic outlook and next week’s PMIs will tell us whether businesses share their optimism. Central bank minutes will also provide more insight into whether policy makers are encouraged and what it means for monetary policy. Country US Optimism grows for the US...

Week Ahead – Stimulus Battle Continues

A lively start to the year It’s been an surprisingly lively start to the year, with recent weeks being dominated by retail traders taking on hedge funds and showcasing the power of social media. While that looks to have gone quiet, a repeat performance may not be far away. With...

Gold Sends For Spandau Ballet

US yields firmed overnight, notably in the 30-year tenor. Hopes rose overnight that the Biden stimulus would pass through the US Senate relatively intact. The prospect of a juicy wave of government spending and borrowing sent longer yields higher, boosting the US dollar, but also lifted US equities, with...

The US Payrolls Remain An Important Input For Trading

Markets The established uptrend in equities continued yesterday as investors anticipated a reopening of the economy in a context of persistent easy monetary and fiscal conditions. Good corporate results added to the move. European equities gain about 1%. Major US indices rose between 1.08% (Dow) and 1.23% (Nasdaq), with the...

Week Ahead – Volatility Going Nowhere

Markets wobble amid retail backlash The last week in the markets has been extremely interesting and highly unusual, to say the least. We’ve long talked about the power of social media and recent events are a prime example of that. While the battle between retail investors and hedge funds may...

Week Ahead – Earnings to Dominate

Big tech in focus Earnings season is up and running and next week will see some huge names reporting on the fourth quarter including Facebook, Apple and Tesla. Covid-19 is becoming more of a focus for investors as lockdowns take their toll and it becomes clear that restrictions won’t be...

Sunset Market Commentary

Markets Yesterday’s technical equity correction already entered calmer waters today. Economic data was limited to a disappointing but unnoticed US NFIB Small Business Optimism (declined from 101.4 to 95.9 vs. 100.2 expected). European stocks opened in the green but gradually turned marginally negative in most areas as a subdued trading...