Market Summary – June 10, 2024

Last Week’s Summary

  • S&P 500 Index rose 1.36%
  • International Equities rose 0.91%
  • Emerging Markets rose 2.37%
  • U.S. 10-Year Treasury Yield fell to 4.43%
  • Unemployment Rate rose to 4.0%
  • Nonfarm Payrolls rose to 272k
  • ISM Manufacturing fell to 48.7
  • Initial Jobless Claims rose to 219k

What to Watch for This Week

  • W, 6/12/24 MBA Mortgage Applications, CPI, CPI Core, FOMC Rate Decision
  • Th, 6/13/24 Initial Jobless Claims, PPI, PPI Core
  • F, 6/14/24 U. of Mich Sentiment, U. of Mich. 1-Yr Inflation

Weekly Market Recap

The world’s largest bond market took a hit as a robust U.S. jobs report prompted traders to scale back their expectations for Federal Reserve rate cuts. A selloff in Treasuries pushed yields up by over 10 basis points, with swaps no longer pricing in a Fed rate reduction before December.

Nonfarm payrolls rose by 272,000, surpassing estimates, and wages increased. Despite the unemployment rate rising to 4%, equities closed well above session lows as the data alleviated fears of an economic slowdown impacting Corporate America.

Both stocks and bonds lost momentum ahead of a crucial U.S. jobs report, which will help determine the Federal Reserve’s next steps.

Earlier in the week, swap traders had increased their bets on rate cuts, encouraged by a series of weaker-than-expected U.S. economic data, the Bank of Canada’s decision to ease monetary policy, and speculation that the European Central Bank (ECB) would follow suit-a move confirmed by the ECB on Thursday.

The latest jobs figures underscore a labor market that continues to exceed expectations, mitigating the economic impact of high interest rates and prices.

This resilience risks sustaining inflationary pressures, likely reinforcing the Fed’s cautious approach. This report is one of the last significant data points Fed officials will review before Wednesday’s rate decision when they are expected to maintain borrowing costs at a Two-Decade high. A key inflation indicator, the Consumer Price Index, is also scheduled for release on the same day.

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