A look back
- Global markets rallied as investors interpreted a weaker-than-expected July employment report as reducing the likelihood of a Federal Reserve (Fed) rate hike this year. The S&P 500 and NASDAQ indexes rose 3.6% and 5.2% on the week, respectively. International developed markets rose 2.3% while emerging markets fell 0.4%.
- Treasury yields declined following the jobs report as investors dialed back expectations for a September rate hike. The 10-year and 2-year Treasury yields finished the week at 4.64% and 4.19%.
- The labor market softened in July as nonfarm payrolls fell by 23k, well below expectations. Meanwhile, the May and June payroll numbers were revised lower by 103k jobs.
A look ahead
- Inflation will be the key macro focus this week. July Consumer Price Index (CPI) is scheduled for Wednesday, followed by Producer Price Index (PPI) on Thursday. Investors will be watching for signs that renewed tensions in the Middle East are contributing to inflationary pressures.
- Discussions surrounding a renewed deal between The U.S. and Iran remain an important market development. If progress stalls, market volatility could remain elevated, particularly in interest-rate sensitive areas.
- Economic releases: July CPI, PPI, Existing Home Sales, Retail Sales, U. of Mich Investor Sentiment
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