The S&P 500 completed six days of consecutive gains, just. The Vix index closed the week just below 20 and 10-year US Treasury yields finished the week back below 2.9%. Two-year Treasury bonds now offer almost 2.2%, in September last year one could not get that for the ten years. The S&P 500 has recovered around 5% from its trading lows of a week or so ago. The US dollar did bounce a little on Friday but remains unloved despite the rise in bond yields, which should make owning the currency more attractive. The week ended with a piece of positive economic data from the US as the University of Michigan Consumer sentiment beat expectations. Like most equity markets, the FTSE 100 regained some of its losses, recovering almost 3% on the week. It was interesting to notice on Friday that the sectors that had been under severe pressure, the like of Telco’s, utilities and healthcare all outperformed, and mining was weaker.
Looking to the week ahead it’s a much quieter week for US economic data, the release of the minutes from the last FOMC meeting looks likely to be the highlight. Flash Markit PMI data for the month of February will also be of some interest. We also get speeches from several members of the Federal Reserve. Markets will be interested to see if the recent volatility will lead them to moderate their hawkish rhetoric.
As for Europe the ECB also release the minutes of their last monetary policy meeting. Other notable economic data points will be Markit flash PMI readings for the eurozone economy, along with the individual countries of France and Germany. We also get Eurozone consumer confidence and the final reading for the last quarter GDP. We also get the latest result from the German ZEW survey. This survey reports on how analysts and economists see the next six months.
It’s a busy week for economic data for the UK, with the December reading for the UK unemployment rate along with December’s average earnings. On Thursday the second estimate for Q4 GDP. Brexit may come back into the news as negotiations continue on such subjects as the Irish border, the City’s access to the EU as well as the transition deal.
Equity markets found their mojo again last week and may well continue to do so if the bond market remains stable. The recent positive economic data should continue to be supportive.