Bassanese Bites: 4th time lucky? – May 13 2024
Global markets – week in review
The global equity market rebound continued into its third week as softer-than-expected US labour market data encouraged markets into believing the Fed could still cut rates a couple of times later this year.
Following on from the previous Friday’s soft payrolls report, the main news last week was a higher-than-expected rise in weekly jobless claims – albeit they remain at quite low levels.
Market chatter about an overdue slowing in the US labour market intensified, causing markets to price in a greater risk of a second US rate cut later this year. Also supported by still encouraging corporate earnings and reassuring Fed rhetoric (to the effect that a rate hike is unlikely), equity markets ground higher. Bond yields, the $US and oil prices have all retreated from recent highs.
The week ahead
Of course, whether the improved sentiment continues this week will crucially depend on the April CPI on Wednesday (US time). The market anticipates a still firm 0.3% gain in the core CPI, which would see annual core inflation ease further to 3.6% from 3.8%. After three consecutive higher-than-expected monthly CPI reports, the hope is that this week will be 4th time lucky – a result at least no worse than expected.
Also of relevance will be April retail sales on the same day, given the continued underlying strength in consumer spending. Producer prices will be released the day before.
