📊 Jobs Surge, Bonds Dip: Your Weekly Market Cheat Sheet

Good morning,

Last week, the S&P 500 continued its impressive run, climbing 14.5% year-to-date. However, its smaller siblings haven’t fared quite as well. The S&P 400 is up 5.3%, the Dow Jones Industrial Average has gained 3.8%, and the Russell 2000 is barely in positive territory with a 1.0% increase.

The job market threw us a curveball this week. We expected 190,000 new non-agricultural jobs, but the economy surprised us with 206,000. It’s a testament to the resilience of the U.S. economy, but it’s not all smooth sailing. The unemployment rate ticked up to 4.1% from 4.0% last month.

Here’s where it gets interesting: wage inflation is showing signs of cooling off. In June, average hourly earnings rose by 3.9% year-on-year, down from 4.1% in May. This combination of strong job growth and easing wage pressure was music to the market’s ears, pushing bond yields down and equities up

Have a great week!

Irving Wilkinson, Editor

AlphaBetaStock.com

The 10-year Treasury yield is holding below 4.51% and seems to be under downward pressure. I’m keeping my eye on a potential target around 4.06-4.00%. This may indicate that the Bond market may be pricing in a Fed rate cut. It’s a delicate balance, and as any seasoned investor knows, predicting interest rates is about as easy as predicting the weather a month in advance.

In corporate news, Tesla delivered better-than-expected numbers, while Boeing made waves with its $4.7 billion acquisition of Spirit AeroSystems. It’s a bold move that Boeing says will improve safety and quality control.

The tech sector saw some interesting developments too. Venture capital funding surged to a two-year high, signaling renewed confidence in startups. Meanwhile, Jeff Bezos is selling $5 billion worth of Amazon shares as the company hits a new all-time high. It’s always worth paying attention when insiders start selling, but remember, they sell for many reasons.

Global Highlights

Across the pond, the UK saw a seismic shift in its political landscape. The Labour Party won a landslide victory, unseating the Conservatives after 14 years in power. They now control 412 of the 650 seats in the House of Commons. As a financial analyst, I always keep a close eye on political changes – they can have profound effects on economic policies and market sentiment.

In the Eurozone, inflation eased to 2.5%, in line with analyst expectations. The core inflation rate, which excludes volatile items like energy and food, held steady at 2.9%. It’s a positive sign, but the European Central Bank still has its work cut out.

China’s economic data painted a mixed picture. Factory activity expanded in June, with the Caixin PMI rising to 51.8%. However, the services sector growth slowed to an eight-month low. As someone who’s spent years studying global markets, I can tell you that China’s economic health has ripple effects across the world.

Oil prices continued their upward march for the fourth consecutive week. The European benchmark is trading around $87.50, buoyed by a significant drop in U.S. inventories. As an old hand in the commodities market, I’ve learned to always look beyond the headlines. Saudi Arabia lowered its official selling prices to Asian customers – a potential red flag for Asian demand.

In the metals market, copper finally broke its seven-week downtrend, now trading at $9,880 per tonne in London. Gold also had a good week, advancing to $2,366 per ounce. Remember, gold often shines brightest when other assets stumble.

The cryptocurrency market, however, had a rough week. Bitcoin tumbled by more than 11%, trading around $55,500. The culprit? The start of reimbursements to customers affected by the 2014 Mt. Gox hack. Over 140,000 bitcoins have been recovered, and their redistribution is causing jitters in the market.

Looking ahead, we’ve got a busy week on tap. Here are the key events I’ll be watching:

The CPI report is forecast to show a 0.1% month-over-month rise in inflation, with the annual core inflation rate expected to hold steady at 3.4%. As for earnings, I’ll be paying close attention to how companies are navigating the current economic landscape.

In closing, let me share a little-known fact about investing: historically, the stock market has had positive returns in about 70% of years. It’s a reminder that while short-term volatility can be unsettling, the long-term trend has generally been upward.

Remember, in the world of finance, knowledge is power. Stay informed, stay curious, and most importantly, stay patient. Until next week, this is Irving Wilkinson, signing off.

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