Week in a Glance: NFP, Comments by Yellen & the Bank of England

10 mai 2021

The main event of the past week was the publication of a stats block on the US labor market on Friday. It seemed that nothing boded ill: the figures from ADP, although they came out slightly worse than forecasted, turned out to be excellent (+ 742K), in addition, the initial applications for unemployment benefits were pleasantly surprised (decreased significantly).

But the NFP figure openly stunned the markets: 266K against the forecast of 978K is, if not a complete failure, then a cold shower for all those hotheads who were waiting for a sharp recovery in the US economy in the second quarter after a more than successful first. The markets, however, were not very upset, explaining to themselves what was happening not so much with the problems with the demand for labor, as with the supply: they wanted to hire, but there was no one.

Is it worth it after that to put an end to the future of the US economy? Definitely not. These data are too discordant with all the splendor that we have observed recently both in macroeconomic statistics and in the reporting season.

Janet Yellen delivered another blow to the bulls in the US stock market. The former head of the Federal Reserve and the current US Treasury Secretary spoke about the rise in interest rates. Uniform panic began in the markets. True, Yellen almost immediately explained that she was misunderstood and all that.

An important event of the week was the announcement of the results of the Bank of England meeting. In general, the parameters of monetary policy were left unchanged. At the same time, the Central Bank raised its own forecasts for the growth rate of the UK economy in 2021 from 5% to 7.5%, but at the same time lowered the estimates for 2022 from 7.25% to 5.75%.

Another important outcome of the meeting - the Bank of England has slowed down the pace of its stimulus program: the volume of weekly bond buybacks will be reduced to 3.4 billion pounds from the current pace of 4.4 billion pounds per week. True, the Central Bank hastened to declare that this is not a tightening of monetary policy.

This week is interesting both by the continuation of the reporting season and by data on consumer inflation in the US, as well as retail sales. In addition, tomorrow's news on GDP growth rates in the UK will be important for the pound.