Notifications Bell

Volatile trading in the week ahead

Volatile trading in the week ahead

US labor market figures released on Friday showed that the country’s economy remains strong

372K new jobs were created, and the unemployment rate remained at 3.6%. The average hourly earnings grew by 5.1% year-on-year, indicating that the salary tension continues. Also, this is one of the factors that the Federal Reserve monitors to measure inflation, which is what the central bank of the United States tries to avoid with its more restrictive monetary policy.

Therefore, it can be said that now there are no signs indicating a deep slowdown in the US economy and even less of a recession, as many economists and analysts were already predicting.

The current debate in the market focuses on how much the Fed will raise interest rates at its next meeting this month; for now, everything points to another 75-bps hike from the last meeting. This was reflected in the yields of US treasury bonds which, after the figure was known, rose along the curve by around eight basis points. The 10-year bond ended the session at 3.08%.

But to confirm it, there is still a relevant figure such as the CPI that will be published this Wednesday. The forecast is that the CPI will grow by 1.1% in June, a figure higher than the previous month. If the figures come as expected, it would signal that inflation is still rising on the side of domestic demand, especially due to full employment.

During June, there have been significant falls in the price of the main raw materials that should affect the CPI data, although it is likely that they have not yet been fully reflected in consumer prices.

In any case, the US economy continues to show strength, giving the Fed free rein to raise interest rates with a final target of around 3.5% or 3.75%.

After a few days in which risk aversion dominated the market due to fear of a recession, on Friday, everything calmed down. Moreover, there were sales of treasury bonds in anticipation of future rate hikes, the US Dollar corrected downwards after the rally of the last few days, and the Wall Street indices remained higher with slight gains.

The Nasdaq added six consecutive days of gains and is approaching the 12,233 zone, which would mark the starting point for further advances towards 12,947.GráficoDescripción generada automáticamente

Sources: Bloomberg, reuters.com

The information presented herein is prepared by Miguel A. Rodriguez and does not intend to constitute Investment Advice. The information herein is provided as a general marketing communication for information purposes only and as such it has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. It does not regard to the specific investment objectives, financial situation or the particular needs of any recipient.

Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research.

Key Way Investments Ltd does not influence nor has any input in formulating the information contained herein. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

Therefore, Key Way Investments Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the information presented herein. Past performance and forecasts are not reliable indicators of future results.