The past week’s stock market price action was as muddled as in early February, the inflation narrative moved front and centre on fears that rising wage pressures would feed broader price rises. This would force the Fed to tighten more aggressively than expected.
The narrative was born from the January jobs report which showed a jump in hourly earnings growth.
On Friday 9th March the February jobs report showed a robust 313,000 jobs created, but not much wage growth, sparking a relief rally that sent the market sharply higher.
Concerns about a potential trade war have also shadowed the market but faded by the end of the week after the steel and aluminum tariffs that President Donald Trump signed Thursday exempted Canada and Mexico. He also left room for others to negotiate exclusions, lifting fears of immediate retaliation.
The S&P 500 closed up 1.7% and booked a 3.5% gain over the week, while the Nasdaq Composite COMP, gained 1.8% and closed at a record high.
The big item out of the US next week are February inflation figures, set to be released on Tuesday morning.
This is important as bond investors tend to demand higher yields in periods of higher inflation and lower yields in periods of lower inflation or deflation.
This will likely remain a pertinent theme across bond markets in the near-term, and this will probably continue to impact the US Dollar via demand for US Treasuries.
The Dollar fell against a basket of major currencies as data showing the U.S. economy created more than 300,000 jobs in February were offset somewhat by weaker-than-expected wage growth, denting expectations for a faster pace of inflation and rate hikes.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.13% to 90.12.
The EURUSD pair ended the week on the backfoot and it threatens to break through the important support region around 1.2250 and move lower in the coming weeks.
The bullishness at the beginning of the week was due to the tariff plan that was proposed by the US administration on the imports of steel and aluminium. Trump added fuel to the fire by saying that they would not back down on the tariffs and said that he might extend it to include the other metals as well. This led to fear and uncertainty in the markets as there was a feeling that this could lead to a global trade war in due course of time.
When the tariff plan was finally signed, we saw that it was a much watered down version of the original plan and we also saw that there were a lot of exemptions
Friday, Bitcoin fell by 5% in value, after another disastrous week for the digital payment solution. This meant that the Bitcoin price had fallen to a one-month low. While the cryptocurrency niche has always been somewhat volatile, the current climate seems to indicate that something more than the mere characteristics of Bitcoin is contributing to its trading travails.
It is suggested that there is something of a mood of fear and panic that is impacting on the Bitcoin price and trading conditions. Analysts believe that continuing bad headlines related to Bitcoin are seriously affecting market sentiment, and ultimately leading to a gloomy short-term outlook for all cryptocurrencies.
Globally, gold rose 0.11% to $1,323.10 an ounce and silver by 0.64% to $16.57 an ounce in New York on Friday.
It’s been a volatile week for bullion but the precious metal continues to hold a well-defined range after turning sharply from key support last week and prices are struggling to hold on to the early March gains.
When/Nation Data Point/Event Expect Prior
10:00 GER ZEW Economic Sentiment Mar 17.8
12:30 USA Core CPI MoM Feb 0.4% 0.3%
12:30 USA Retail Sales MoM Feb 0.3% -0.3%
12:30 USA Core Retail Sales MoM Feb 0.4% 0.0%
12:30 USA PPI MoM Feb 0.2% 0.4%
14:30 USA Crude Oil Inventories 2.408 Million
12:30 USA Philadelphia Fed Mfrg Index Mar 23.3 25.8
10:00 EZ CPI YoY Feb 1.2 1.2
12:30 USA Building Permits Feb 1.320M 1.377M
14:00 USA JOLTS Job Openings Jan 5.9M 5.811M
The cryptocurrency rout continues, while the Dollar remains KingMay 13, 2022
Looking forward to some potential opportunities out of the US CPI print tomorrowMay 10, 2022