The above report confirmed that the US labor market remains very resilient in overcoming both high inflation and rate hikes, something that we view as positive for this economy in the medium term, as it is a clear indication that it is quite Is behaving better than predicted by many candidates.
We believe that the “hard landing” scenario for the US economy is now very unlikely, and that both the “soft landing” scenario and even the “no landing” scenario are win-win scenarios, in which the US is highly Appreciation will be avoided. Recession.
At the price level, note that wage growth is slowing despite the stress shown by the labor market, something we understand will please FOMC members, officials, who will be “quiet” from now until next week’s meeting. “to stay”, as the regulation dictates, so investors will lose an important context, as they will not be able to have their own opinion.
We continue to think that despite these very positive employment data, the Fed will bet on “stopping the road” in its rate hike process. However, we do not rule out further rate hikes in future if inflation does not come down at a desirable pace.
Although the strength of the report weighed on bond markets, assets whose prices fell on Friday pushed their yields higher again, equities took them very differently, leading to a small rally in both Wall Street and European stock markets , which participated in all sector activity, although it was led by the more cyclical values/sectors that have been underperforming in recent months and did not participate in the good behavior that other sectors were most defensive and Above all, the technology sector.
We hope that this momentum was not time-bound, and that the prices more closely associated with the cycle dominate and allow the indices to resume their upward trend. However, before that, the central banks should make it clear in their meetings that the process of raising interest rates is ready to end.
Thus, and while waiting for the aforementioned meetings of the monetary policy committees of central banks, investors will have time to “consolidate” their interest rate forecasts this week, although they will not have many relevant macroeconomic references that provide more relevant information. Can provide
Perhaps the most important indicators to be released this week are the May final readings of purchasing managers’ indices for the services sector, the Services PMI and the US Services ISM, which will be released later in the day. Confirm that the main Western developed economies are growing at a moderate rate – it should be remembered that the relative weight of the service sector in the GDP of these countries is close to 80% -.
