Bassanese Bites: On song – August 08 2022
Week in review
It was a mixed week for global markets, with investors still unsure whether to laugh or cry about the fact the US is not yet in recession. After some early fleeting geo-political concerns surrounding US House speaker Pelosi’s visit to Taiwan, US stocks were buoyed mid-week by a stronger than expected services survey. But the joy was not repeated on Friday after a much stronger than expected July gain in US employment, especially as it was associated with equally strong wage growth.
The good news is that the US is clearly not in recession now. The bad news is that the economy is so hot that hopes of a Fed pivot sometime soon are diminishing – as evident by a chorus of Fed speakers last week who remained consistently hawkish (trying as they can to quash the dovish spin the market placed on Powell’s post-meeting comments a week earlier).
Overall, a rethinking of the Fed pivot trade saw global stocks consolidate last week after recent solid gains while bond yields and the $US bounced back. Oil prices continued to tumble.
