Trader trades on the New York Stock Exchange (NYSE) in Manhattan, New York, USA, May 5, 2022. REUTERS / Andrew Kelly / Files
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A look at the upcoming market day from Dhara Ranasinghe.
When the Dow Jones blue-chip index falls more than 1,000 points in a single day, US government bond yields jump up to 20 basis points and the British pound falls more than 2 percent, you’ll be forgiven for thinking investors are went on sale mode everything.
But with the dollar asylum at 20-year highs, there was at least one asset that took advantage of market chaos on Thursday.
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Surely the waters seem calmer with the start of European trade, although stocks in Asia fell overnight.
After sighing with relief that the Federal Reserve had not opted for a massive 75-point rate hike this week, investors were worried that the aggressive rate hike – such as the 50 basis point move provided by the Fed – could cause a sharp economic slowdown or recession.
Adding to the volatility was the jump in real income on US bonds or adjusted for inflation, which rose to its highest levels since early 2020.
The Bank of England’s warning of the risk of recession and rising inflation above 10% only exacerbated concerns about growth prospects, causing the biggest one-day decline since March 2020 (and we all remember why this month stands out, right?)
Given that the United States is a day for non-agricultural wages, Friday’s trading session may not bring a quiet end to the week.
Economists polled by Reuters predict that the US economy created a solid 391,000 new jobs in April, up from 431,000 a month earlier.
Unemployment is expected to fall to 3.5%, which would be low before the pandemic.
Job data, along with next week’s US inflation data, should help shape the debate on the Fed’s policy prospects.
Key developments that should give more guidance to the markets on Friday:
– Consumer prices in Tokyo are rising at the fastest pace in 7 years, read more
– The ECB must quickly raise key interest rates, says the head of the German Ifo Institute –
– Minutes of the Swedish Central Bank
“The President of the Federal Reserve Bank of New York, John Williams.”
– Non-agricultural wages in the United States
– Brazil April CPI
– European profits: Adidas, IAG, Amadeus, Intesa San Paulo, Beazley
– Profits in the US: CIGNA, Goodyear
Wages in the United States that are not farmers. Register now for FREE unlimited access to Reuters.com
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Report by Dhara Ranasinghe, edited by Karin Strohecker
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