All major global stock-markets were lower last week apart from India which managed to gain slightly. Bond yield rose, commodities were mixed but generally higher.
The monthly private payrolls report from ADP (a giant US payroll processing company) showed that 497k US jobs were unexpectedly created in June – well above forecasts. This is why the US 10yr Treasury yield jumped above 4% last week for the first time since March. At the same time the yield on the UK 10-year gilt rose above 4.7%, the highest since October 2008.
The official US non-farm payroll data on Friday showed that 209k jobs were added which was less than forecast, but average hourly earnings in June came in above expectations which keeps pressure on the Fed in the battle against inflation and keeps the ‘higher for longer’ narrative in focus.
Also released last week was the minutes from the Fed’s latest FOMC meeting. It indicated that policymakers agreed more interest rate hikes will be needed this year. Markets are pricing in a greater than 90% chance that the Fed will raise rates by 0.25% this month. Investors will be closely watching the US June inflation report due this week.
US ISM data released last week showed a disparity between the manufacturing and services sectors. US Manufacturing PMI fell to 46, which was below expectations but the US Services PMI jumped to 53.9 in June, well above forecasts of 51.
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