Markets still driven by stagflation fears

The April US jobs report was good with 428k new jobs and a slight slowdown in wages, but this did not stop long rates from continuing to rise (US 10y at 3.13%) and equities from falling, with the US indices recording their 5th consecutive weekly decline, something that has not happened for 11 years. The drop in the participation rate could indicate that many people who left or lost their jobs during the Covid crisis will not return to the labour market and that wage increases of more than 5% yoy will continue. The Fed has confirmed that it is set to tighten policy sharply after last week’s 50bp rate hike and the fact that the BoE is looking at a recession for the UK economy in 2023 confirms that this monetary tightening will not be without consequences.

Chinese imports merely stagnated yoy in April, which is a lesser evil than expected, but the trend remains clearly downward and export growth has slowed very sharply to +3.9% yoy. The anti-Covid policy continues to be a major drag on activity and is reinforcing shortages in the global industry.

The economic calendar is light today. Inflation will continue to dominate the markets this week with the release of the US figures for April (Wednesday) which could confirm that the high point has been reached, but there is very little chance that this will change the Fed’s policy in the short term. The USD is slightly stronger in the context of risk aversion: the EUR/USD is testing the 1.05 support again. 

Share this news :
Share on twitter
Share on linkedin
Share on email

You might also read :

September 28, 2021


As crude prices continued to rally, with ICE Brent crude prices reaching 80 $/b at the prompt, we are starting to see signs that the…
December 16, 2021

Indian demand bounces back

Yesterday’s EIA data release had a surprisingly bullish tone, with stock draws across the board, particularly in seasonally building products such as gasoline and propane.…
November 23, 2021

EUAs finally climbed above 70€/t

The forecasts of lower temperatures supported the power spot prices in northwestern Europe yesterday which climbed to 249.81€/MWh on average in Germany, France, Belgium and…
Join EnergyScan

Get more analysis and data with our Premium subscription

Ask for a free trial here

Don’t have an account yet?  Sign up here!