What mattered last week and a preview of the week ahead

Charts (3)

What mattered last week:

  • The S&P500 recovered some of its previous week's losses as better economic data offset concerns over a second wave of COVID-19 cases.
  • In particular, U.S. retail sales data rebounded 17.7% in May, the biggest gain in history as online sales boomed.
  • As well as an announcement from the Federal Reserve it would buy U.S. corporate bonds.
  • And continued talk of another round of stimulus in the U.S. in the shape of a US$1 trillion infrastructure spend.
  • Volatility, as measured by the VIX index, closed relatively unchanged at 35.1.
  • U.S. 10-year yields closed unchanged at 0.70%.
  • Gold gained almost $15.00 for the week and is retesting recent range highs near $1750ish.
  • Crude oil regained all the previous week's losses to close at U.S $39.83/bbl on signs that oil-producing countries are adhering to production cuts.
  • The ASX200 rose +1.62% to 5942.6, despite a worse than expected jobs report for May as employment fell by 228,000 and the unemployment rate rose to 7.1%.
  • In FX, the AUDUSD closed the week slightly lower at .6835.

For the week ahead, the key events are:

A key focus for traders this week will be on new Covid-19 cases in parts of the U.S, China, and Australia as well as business PMI’s in the U.S, Japan, and Europe.

Australia: RBA Governor Lowe participates in a Panel discussion at the ANU Crawford Leadership Forum – Global economy and Covid-19 (Monday).

New Zealand: RBNZ meeting (Wednesday), balance of trade (Thursday), ANZ Roy Morgan consumer confidence (Friday)

  • RBNZ meeting (Wednesday): The RBNZ is expected to keep the OCR on hold at 0.25%. Interest will, therefore, be on commentary relating to the better than feared economic data, the higher exchange rate, and if the RBNZ decides to lift the LSAP cap now or at a later date.

China: Loan Prime Rate (Monday).

Japan: Jibun Bank PMI’s (Tuesday),

U.S: Existing home sales, Markit PMI’s, new home sales (Tuesday), house price index (Wednesday), durable goods orders, jobless claims (Thursday), PCE (Friday).

Canada: Nothing of note.

Euro Area: EA consumer confidence, German and EA Markit PMI’s (Tuesday), German IFO business sentiment survey (Wednesday), German consumer confidence (Thursday), EA business confidence, economic sentiment and German inflation (Friday)

UK: Markit flash PMI’s (Tuesday).

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