US Session (11/05/2021)
Stocks rose on the back of a rally in companies that stand to benefit the most from an economic recovery, as well as positive results from Pfizer's COVID-19 pill study. Treasury 10-year yields have fallen below 1.5%.
All major equity benchmarks set new highs, with the S&P 500 posting its fifth consecutive weekly gain, the longest streak since August 2020. Despite the fact that industrial and commodity stocks outpaced technology firms, the Nasdaq 100 rose for the tenth day in a row. Airlines, cruise lines, hotels, and small-cap stocks all increased their stock prices.
The labor market in the United States returned to normalcy in October, with a larger-than-expected and broad-based payroll increase, indicating greater progress in filling millions of vacancies as the effects of the delta variant faded.
After large upward revisions to the previous two months, nonfarm payrolls increased by 531,000. The unemployment rate fell to 4.6%, while labor-force participation remained stable. Earnings per hour rose in line with expectations, rising the most since February.
Asia Session (11/07/2021)
Asia's markets remained flat on Monday, as investors waited to see how pricing pressures affect monetary policy and the pace of economic recovery. Treasury yields have recovered from their recent decline.
In Japan, equities were barely changed, while they declined in Hong Kong and South Korea. US futures fell as all major US equity benchmarks set new highs on Friday, with the S&P 500 earning its fifth consecutive weekly rally. This followed a larger-than-expected and broad-based increase in US payrolls, which also indicated an increase in average hourly earnings.
Stocks in China swung this week as the communist party met for the first time in more than a year. The meeting is likely to pave the groundwork for President Xi Jinping's term extension, who has roiled markets with his "common prosperity" effort to redistribute the nation's wealth.
Australian bonds rose after the 10-year treasury rate in the US fell below 1.5%. This week's consumer price index in the US will be eagerly watched by markets. The dollar soared while the yen fell.
Europe Session (11/05/2021)
Concerns over rising inflation countered global central banks' commitment to keeping monetary policy accommodating, sending European markets up with the dollar. Investors anticipated the upcoming US employment report before reassessing their rate-hike expectations.
After the underlying gauges established new records on Thursday, futures on the S&P 500 and the Nasdaq 100 indexes surged along with the Stoxx 600 index in Europe, which reached a new high. Treasury rates on longer maturities have fallen. Oil prices continued to rise as OPEC+ rejected US calls for increased supply.
Markets were bracing for an earlier-than-expected rate rise until the Federal Reserve, the European Central Bank, and the Bank of England all pushed back on those expectations throughout the week. The Fed has started withdrawing stimulus, but chair Jerome Powell also showed a willingness to maintain growth even if it means risking overheating. Unless the US jobs report surprises, an impasse between markets and authorities may deepen.
US Energy Secretary Granholm: Biden wants to speak more on the possibility of a future SPR release.
RTE's Connelly: There is growing anticipation that the UK would invoke Article 16.
Money markets no longer expect the Bank of England rate to be 1% in 2022.
BoE Gov. Bailey: Interest rates will have to rise at some time; We will not be reverting back to 4-5% rates.
ECB's de Guindos: The decision of what to do following the end of PEPP in March 2022 will be made in December this year.
ECB's de Guindos: Inflation in the eurozone will fall next year, although not as much as projected owing to second-round effects.
China: People who support Taiwanese independence will be denied entry to the mainland, Hong Kong, and Macau.
Monday FX Option Expiries
USD/JPY: 114.25 ($1.12B), 111.90 ($840M), 112.00 ($538M)
EUR/USD: 1.1785 (EU640.6M), 1.1600 (EU549.6M), 1.1550 (EU470.1M)
USD/CNY: 7.2500 ($730M), 6.9000 ($420M), 6.7740 ($338M)
USD/CAD: 1.2700 ($310M)
EUR/GBP: 0.8575 (EU1.06B)
GBP/USD: 1.3350 (GBP359.8M)