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WEEKLY SUMMARY: Peace plans & payrolls plunge trounce rate-hike odds U.S. equities rallied strongly, with several indexes reaching record highs.
The Nasdaq led with its best week since April, supported by solid earnings, renewed AI enthusiasm, and hopes for a reopening of the Strait of Hormuz. The U.S. labor market weakened sharply. Payrolls fell by 23,000 in July versus expectations for an 80,000 gain, while previous months were revised lower. Job openings also declined and ADP private payroll growth slowed to just 44,000. Unemployment nevertheless edged down to 4.1%. Rate-hike expectations declined: following the weak jobs report, the probability of a September Fed hike dropped to roughly 42% from 55%. U.S. business activity remained resilient. U.S. manufacturing PMI jumped to 55.6, its highest since May 2022. Services remained in expansion at 54.1, although employment weakened and price pressures remained elevated. Treasuries rallied, helped by falling oil prices and softer employment data. The U.S. 10-year yield declined from 4.74% to around 4.64%. High-yield credit also performed well amid the broader risk-on environment. Europe participated in the rally as STOXX Europe 600 gained +1.7%. In Asia, the Nikkei 225 gained 1.9%, but the yen weakened back beyond JPY 158/USD following the previous week's coordinated U.S.-Japan intervention. Markets continue to anticipate another BoJ rate hike, potentially as soon as September. China CSI 300 gained 2.3%. Gold surged to a two-month high, ending with its best weekly performance in seven months. as China re-engaged.
Have a great weekend !
Charles & Syz Research Lab
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