Weekly Market Wrap 03-May to 07-May 2021

Marius Paun | London, UK | Senior dealer |Friday 07th May 2021

The US Jobs Report For April Weaker Than Estimated

Amid so much back and forth debate about rising yields, the US Fed Chair Jerome Powell came out this week saying the outlook has improved, but the economy is not out of the woods yet. On the other hand, Treasury Secretary Janet Yellen said mid-week that rates might have to rise to keep the economy from overheating. Her statement goes against Powell’s stance, who has refused so far to acknowledge the possibility of hiking any time soon. In reaction, the stock markets tumbled on heightened uncertainty with analysts weighing up who’s running who.

On Friday, we had the US non-farm payrolls data released, which showed only 266,000 new jobs added in April, much less than expectations for little under 1 million jobs. On top of that, the unemployment rate rose to 6.1% versus the consensus of 5.8%. Sector-wise, leisure and hospitality added jobs but manufacturing employment fell. Many employers are now struggling to fill vacancies even with wages on the rise.

Furthermore, March number of 916,000 jobs added was revised down to 770,000 but February was revised upwards to 536,000 from 468,000.

It appears that Beijing and Washington are ready to hold talks to discuss the trade deal. The US Trade Representative Katherine Tai is going to talk to her Chinese counterpart Liu He to review the existing agreement. We also saw China’s Caixin PMI for April figures for April; Services jumped to 56.3 from 54.3 previously and Composite 54.7 from 53.1 last time.

The European Union has come up with a proposal to ease restrictions on non-essential travel into the bloc for those tourists who’ve been vaccinated. There seems to be a sense of optimism making its way back into Brussels with ECB member Kazaks making a bold statement: there is a chance of slowing bond purchases starting in June this year!!!

In the UK, the Bank of England left the benchmark interest rate unchanged at 0.1% as widely anticipated, with all 9 members voting in favour. In addition, gilts purchases will stay at £875 billion and corporate bond purchases at £20 billion. The UK GDP is thought to have fallen by 1.5% in Q1 but expected to recover strongly to pre-Covid levels later in the year.

The US oil prices continued their advance this week to a high of $66.68 before retracing to $65.00 going into the weekend. Gold also enjoyed a good week, rallying to $1832 on Friday afternoon, on the back of ongoing speculation of returning inflation. Ethereum, the second-biggest cryptocurrency after Bitcoin by market cap, has hit a fresh record just shy of $3,600 following news of a potential digital bond sale on its blockchain. Does it seem that institutional adoption of crypto space is now well underway?