US Senate passes President Biden’s $1 trillion infrastructure bill, whilst inflationary pressures steady
Equity markets rose over the week, as the expectation of further fiscal support remained tantalising close, whilst any fears of yet a further acceleration in inflationary pressures were alleviated by the latest release of the consumer price index in the US.
US initial jobless claims fall for the 3rd week in a row, despite the spread of the Delta coronavirus variant
The US Senate passed a $1trillion infrastructure bill, which now goes on to the House of Representatives, which is expected to sit again in September. The latest consumer price index data allayed fears of yet a further acceleration in inflation, as it came in at 5.4% for the year to July, the same level as the preceding month. Although this remains a high number, whilst it has steadied it gives credence to central bank rhetoric that rising inflationary pressures will be transitory, linked to the reopening of economies. This combined with some of the strongest second quarter company results reported for many years, in terms of earnings, revenues, and profit margins, bolstered stock markets. In addition, initial jobless claims in the US fell for the third week in a row, despite the continued spread of the Delta coronavirus variant, providing hope that further economic lockdowns are becoming increasingly unlikely.
Equity markets gain, with the US market close to doubling since its low in 2020
As of 12pm London time on Friday, US equities over the week rose 0.6%, whilst the US technology sector gave up some gains, falling 0.1%, as more economically sensitive stocks outperformed. European equities rose 1.2% and the UK market increased by 1.3%. Japanese stocks were up 1.4% and the Australian market rose 1.2%. Meanwhile there was very mixed performance amongst the emerging markets, which in aggregate fell 0.1%.
US bond yields rise as concerns over the spread of Covid begin to subside once more
10-year US Treasury yields, which move inversely to price, rose as high as 1.38% mid-week, before moderating after the release of the inflation data, with yields now trading at 1.35%. German and UK bonds finished the week close to where they started, trading at a yield of -0.46% and 0.60% respectively.
Gold suffers a sharp sell off on Monday following strong jobs numbers in the US last week
Gold suffered a steep fall in early trading in Asia on Monday, falling as low as $1,707 an ounce before recovering over the rest of the week and now trading at $1,760.
Crude oil also experiences a volatile week on the back of concerns over a Chinese slowdown
Brent crude oil also had a volatile week, falling as low as $67.8 a barrel, before recovering to $71.2 by Friday.