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Weekly commentary 03 June 2021

Weekly Market Commentary

 

 

Investors are laser focused on the US jobs report due this week after last month’s significant miss

 

With the US and UK markets closed yesterday, equity trading volumes were thin, with European indices posting small losses. Markets are now looking to the next fortnight with a series of key data releases ahead. 

 

While COVID-19 cases fall at a global level, the UK’s focus remains on the Indian variant

 

At a global level, the aggregate number of new coronavirus cases continues to fall and while there are still hotspots within Asia, India appears to have turned the corner. Focus in the UK is on the rise of the Indian variant which has led to an increase in new cases and question marks over whether the full reopening can take place on 21 June. Press reports over the weekend suggest that 21 June may see another partial reopening, with masks and other guidance set to remain for the short term at least. Elsewhere, Vietnamese health officials reported that they had detected a new variant that combined aspects of the Indian and Kent variants, which were more transmissible than the prevailing versions of the virus.

 

Euro area CPI is released later today as investors cautiously wait for signs of inflation

 

On Friday, the US non-farm employment report will be released following a hefty miss last month in the April numbers. The primary interpretation of this underwhelming report was that labour shortages and supply chain issues were holding back the numbers rather than a lack of economic momentum. Pleasingly, since the report, weekly unemployment claims figures have beaten expectations with the result that economists expect last month to be a blip rather than anything else. Of course, while the focus will be on May’s numbers, Friday’s data release also gives the opportunity to revise that April figure. May is expected to see 650,000 new jobs created and for the unemployment rate to fall to a post-pandemic low1. Later today, we will receive the euro area flash Consumer Price Index (CPI) figures and while US inflation remains the hot topic, investors will be watching this release closely to see if inflation is becoming a global theme.

After a relatively quiet week for data, the US jobs report will provide an essential temperature check, not only on the health of the US economy but also on supply led inflationary pressures. Arguably the key data point is the US CPI figure next week but should the employment report hint at labour shortages, inflation concerns could quickly return.

 

1 Bloomberg, 31 May 2021 (https://www.bloomberg.com/news/newsletters/2021-05-31/what-s-happening-in-the-world-economy-a-k-shaped-global-recovery)

 

The Week In Numbers

 

 

 



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