Choppy trading in stocks, bonds, and currency whipped the markets around last week. At his post rate-decision press conference, ECB President Draghi warned that people need to get used to heightened volatility, adding more instability to an already unpredictable market. Greece crept closer to the edge, as leaders in Athens held out from agreeing to their creditors’ “final offer” and pushed back repayments of IMF debt until the end of June. The US May jobs data was very strong, keeping alive the prospect of a September Fed hike, rekindling jitters that higher rates are in sight. The Atlanta Fed raised its tracking estimate for Q2 GDP by three-tenths to 1.1% after the trade deficit narrowed to $40.9 billion in April from March’s six-year high of $51.4 billion, a steeper decline than expected. More breathtaking volatility on the Shanghai Composite ended in a nearly 9% rally on the week after official PMI numbers missed expectations and sustained hopes for more PBoC easing. In the same timeframe, US stocks mostly lost ground: the DJIA slipped 0.9%, the S&P500 fell 0.7%, while the Nasdaq was flat on the week.

Bond volatility was extremely pronounced this week as traders juggled monetary policy divergence between the US and the rest of the world against the threat of a Greek default. The yield on the German 10-year bond soared from 0.50% last Friday to an eight-month high of 0.99% on Thursday before easing slightly on Friday. The 10-year US yield hit a fresh 2015 high of 2.44% on Thursday and matched that level again after the jobs report, up from 2.12% last Friday. EUR/USD was similarly volatile, rising more than four and a half big figures from 1.0900 as high as 1.1380 on Thursday before the strong jobs report sent the pair back as low as 1.1050. USD/JPY was less choppy as the pair tested the key level of 124.50 all week before breaking higher on Friday, to 125.80, after the jobs report.

Continue reading “Market Recap & Economic Reports 6.09.2015”