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Archinomics Weekly - Monday 7th June 2021

4 months ago



US equity markets crept higher, boosted by strong macro data and led by the energy sector. European markets also advanced, although were held in check by inflationary fears. Japan’s stock markets were mixed, as the government extended the Covid-19 state of emergency in Tokyo, Osaka and seven other areas. China saw profit taking after three weeks of gains.


The yield on benchmark 10-year US Treasury bonds fell back, and prices rose, after the May unemployment report. Core eurozone bond yields also drifted lower, on gathering expectations that the European Central Bank (ECB) bond-buying programme would be maintained. Yields in peripheral European bond markets moved in line with the core. Corporate bond markets traded quietly on light volumes, while the high yield market was equally subdued. Emerging market debt outperformed the global aggregate index.


The euro slipped against the dollar and the yen, while remaining flat against sterling. The dollar rose against all majors, except the yen, which was firmer across the board.


Oil prices hit the highest level for two years after OPEC member states forecast an orderly return of Iranian production, thereby maintaining ‘relative stability’.

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The G7 reached initial agreement on a global minimum tax rate of 15%, aiming to ensure that countries have the right to tax a proportion of the profits of large profitable multinationals in the locations where it is generated.


US non-farm payrolls fell short of expectations, coming in at 559,000 against consensus forecast of 675,000, while the unemployment rate dropped from 6.1% to 5.8%.

The UN’s Food and Agriculture monthly index jumped by 40% y/y, the highest monthly rise in a decade, which could be passed on to consumers in developed markets.

US ISM Services index for May jumped to 64 from 62.7, while the PMI Services index hit 70.4 as the sector caught up with the recovery in the Manufacturing sector.

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US May headline CPI are forecast to rise further to 4.7%, after 4.2% in April.

The monthly meeting of the ECB is unlikely to bring any changes in policy, although adjustments to the emergency bond-buying programme could be discussed.

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