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Archinomics Weekly - Monday 5th July 2021

6 months ago

the
MARKETS

Equities

In the US, the S&P 500 and the Nasdaq hit new highs and logged a fifth consecutive positive quarter. European markets were weakened by concerns that inflationary pressures could bring forward interest rate hikes. China’s CSI 300 index suffered its worst day in three months, as profit taking set in after the Chinese Communist Party’s centenary celebrations.

Bonds

Yields on US Treasury bonds continued to edge down, as prices rose, most notably among longer dated bonds. Core eurozone government bond yields fell, reflecting growing fears about the spread of the delta variant of Covid-19. Investment grade bond markets were bolstered by a dearth of new issuance, while high yield market sentiment was largely positive. Emerging market debt spreads hovered above recent lows.

Currencies

The US dollar gained ground against all majors, on talk of interest rate hikes, while the euro fell across the board. The yen improved versus sterling, which only managed to make gains against the euro.

Commodities

Oil prices lost momentum as an agreement by OPEC+ on amending production cuts was postponed until after the weekend.

Responsible investing

A global minimum corporate tax rate was agreed by the G7 group of nations. The deal will see international companies pay tax in the countries that they operate in, potentially bringing an end to offshore tax havens.

MACROECONOMIC
UPDATE

US June non-farm payrolls of 850,000 showed the biggest monthly gain since August, although the unemployment rate edged up to 5.9%.


Manufacturing PMI data from across the globe came off the boil slightly, while still maintaining historically high levels.


The outgoing chief economist of the Bank of England warned that the threat of a rapid increase in prices was ‘rising fast’.

on the
RADAR

Services PMI data from across the globe should continue to show a catch up with high levels of manufacturing data.


Minutes from the June meeting of the US Federal Reserve could shed more light on prospects for QE tapering and future interest rate hikes.

Listen to our weekly podcast for more information and our experts’ insights.

Architas

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