Equity markets in the US finished last week on the front foot. The S&P 500 closed 0.6% higher on Friday following the broadly positive employment report, with tech stocks leading gainers.
Friday’s employment report highlighted strong employment growth in the US last month (222k jobs added in the month versus expectations of 178k). However, wage growth, a key driver of inflation, remains elusive, coming in at +0.2% month-on-month versus expectations of +0.3%.
US bond markets were relatively unmoved on Friday. The yield on the 10-year Treasury moved up 2bps (prices fell) to close at 2.39%. The US dollar gained 0.2% Friday while Gold fell 1%, reaching its lowest level since March.
Key data releases this week include US inflation readings on Thursday (CPI – Consumer Price Index) and Friday (PPI – Producer Price Index), German and French inflation readings (both Thursday), and US retail sales numbers on Friday.
European equity markets were little moved on Friday as the Euro Stoxx 50 index settled a modest 0.1% higher. However, for the week the index did gain 0.7% and so snapping a run of four weeks of consecutive declines.
European bond markets were a little bit more mixed on Friday following positive industrial production data releases. Yields on German 10 year bonds rose modestly (prices fell), outperforming the periphery which finished 6-9bps higher, led by Portugal after they pushed back a bond auction to this week.
Japanese equities gained 0.8% this morning, boosted by a weaker Yen. Tech (+1.8%) and Real Estate (+1.5%) led the index higher.