A double dose of jobs data from both the US and Canada last week gave investors plenty to digest. While Canadian numbers were less encouraging, strength in the US recovery was invigorated by stronger-than-expected employment data, which sent the dollar rallying and 10-year bond yields hit nearly 2-year highs to close at 2.74%. The markets now are at crossroads with strong growth momentum returning in the developed economies with the US at the forefront.
For the week, DOW gained 1.5%, S&P 500 was up 1.6%, and NASDAQ jumped 2.2%.
Asian stocks also clinched higher, tracking strong gains in European markets after the European Central Bank (ECB) and the Bank of England (BoE) signaled intent to maintain accommodative monetary policy. The much touted Japanese economy, which has seen record correction post its 5-1/2 year peak hit on May 23, is now in a confirmed up trend with equity indices up over 10% since June 2013.
The uproar in Egypt last week led to a surge in Oil Prices as fears of supply disruption saw the best price gains in crude of over 5% seen since May 2012.
Gold settled lower after positive US jobs data rekindled worries that the Federal Reserve could be tempted to scale back its monetary stimulus later this year. The precious metal, once viewed as a safe haven, is now being shunned from most portfolios as defensives seem the worst place to hide in a resumption of growth environment.
US Q2 earnings season gets started this week, which is likely to provide a further sense of direction to the markets. Corporate earnings will be under even more scrutiny than usual, as investors have been on heightened alert for any sign of economic improvement.
Following are Sentiment charts for S&P 500 (NYSE:SPY), DOW Jones, and NASDAQ (NASDAQ:QQQ).
Following is an economic overview for the week July 07 - July 12, 2013.
(All times EST)
Sunday, July 07
19:50 — Japan Current Account (June 2013):
Monthly report will present trade developments for June, which may affect direction of the Japanese Yen.
Monday, July 08
08:30 — ECB President Draghi Speaks:
Mario Draghi will testify on the EU economy at the quarterly hearing of the Committee on Economic and Monetary Affairs of the European Parliament.If Draghi provides some insight behind the future steps of ECB’s monetary policy, this testimony could affect the Euro.
21:30 — China Consumer Price Index (June 2013):
During May, Chinese inflation slipped to an annual rate of 2.1%, which is lower than China’s target inflation. If the inflation continues to slide, it could indicate that China’s economic progress is further cooling down.
Tuesday, July 09
04:30 — Great Britain Manufacturing Production:
This update will present the annual rate of GB's manufacturing production for May. In April 2013, the index changed direction and fell by 0.2% (month to month).
Wednesday, July 10
Japanese Monetary Policy Statement (tentative):
Minutes of the last monetary policy meeting will be published. This report could offer some insights pertaining to the future decisions of Bank of Japan.
China Trade Balance (tentative):
For May, China's trade balance rose to a $20.4 billion surplus. A further rise may positively affect commodities prices.
10:30 — Crude Oil Inventories:
EIA (Energy Information Administration) will publish its weekly report on US crude oil inventories for the week ending on July 5 2013.
14:00 — FOMC Meeting Minutes:
During the last FOMC meeting, Fed left its monetary policy unchanged but Bernanke hinted that the Fed might start tapering by the end of the year.The upcoming minutes could shed some additional light behind the future plans of the Fed.
16:10 — Bernanke's Speech:
Ben Bernanke will give a speech at the National Bureau of Economic Research Conference. The title of his speech is "A Century of US Central Banking: Goals, Frameworks, Accountability".His press conference following the FOMC meeting, might stir up the markets.
Thursday, July 11
08:30 — US Unemployment Claims:
Weekly report will refer to changes in initial jobless claims for the week ending on July 5. In the previous report jobless claims fell by 5k to reach 343k. This upcoming weekly report may affect the US dollar and consequently commodities and equities markets.
14:00 — US Federal budget Balance (June 2013):
This report will indicate government debt growth and thus may affect the US dollar. In May, the deficit rose by $138.7 billion. An increase in deficit could influence US policymakers to make additional cuts to the budget.
Friday, July 12
08:30 — US Producer Price Index:
This report will show developments in the PPI during June 2013. In May, this index for finished goods increased by 0.5% when compared to April’s level and the core PPI saw an increase of 0.1%.
09:55 — Preliminary University of Michigan Consumer Sentiment:
This survey will provide insights pertaining to US Consumer Sentiment. According to the recent update in June (is June correct?), the sentiment index slipped to 82.7.
This commentary is for informational purposes only and does not constitute investment advice. The opinions offered herein are not recommendations to buy, sell or hold securities. Market IQ expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.