The prospect of the Fed raising interest rates has strengthened, and the offshore yuan has risen by more than 600 points throughout the week

May 29, 2024, 11:58 AM

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Highlights at a glance

In May, U.S. nonfarm payroll growth slowed from April but still exceeded expectations, supporting the Federal Reserve's plans for aggressive interest rate hikes. The unemployment rate stabilized, while labor force participation rose. Despite a rebound in stocks, the market faced declines, and the dollar strengthened amid increasing treasury yields. European markets showed weakness with rising bond yields, while commodities like crude oil experienced gains despite OPEC+ production increases.

U.S. nonfarm payrolls growth in May slowed from April but still beat expectations, the unemployment rate stabilized, the labor force participation rate rose, and wage growth was modest. Investors believe that the Fed still has room to aggressively raise interest rates to suppress inflation, and it will maintain the pace of monetary tightening and increase the possibility of continuing to raise interest rates by 50 basis points in September. The U.S. stock market, which had just rebounded on Thursday, turned down. The three major indexes closed down on the third day of the week after only four trading days. Just after the multi-week losing streak ended last week, it returned to the trend of weekly losses.

A major report showed that U.S. employment increased more than expected, strengthening the prospect of aggressive interest rate hikes by the Federal Reserve. The U.S. dollar index, which fell back on Thursday, rose after an intraday gain and rose again to 102.00, close to the more than one-week high set on Wednesday, the first weekly cumulative gain in the past three weeks. The yield on the benchmark 10-year U.S. Treasury bond jumped during the session after the employment data was released, approaching 2.99% at one point, setting a new high in more than two weeks. Although U.S. stocks pared some of their gains during the session, they still rose sharply throughout the week, reversing a three-week losing streak. momentum.

The offshore RMB against the U.S. dollar rose sharply in early Asian trading. It broke the 6.62 mark for the first time in nearly a month, and rose more than 500 points from the intraday low. After that, it gradually gave up most of its gains. It rose more than 600 points, extending the weekly gain since early May.

In the European market, European stocks fell and fell all week. European bond yields rose further. The benchmark 10-year German bond yield continued to hit a nearly eight-year high. The Italian government bond yield, which led the climb, rose by about 50 basis points this week. After announcing a record high CPI inflation in the euro zone, investors further bet on the European Central Bank to raise interest rates this year, with market prices reflecting that investors expect a 50 basis point rate hike by October.

Among the commodities, international crude oil continued to stage an intraday turnaround, and U.S. WTI crude oil once again hit a high in nearly three months, although OPEC+ expanded production beyond expectations, China eased epidemic prevention restrictions and stabilized growth measures, and the market was worried that OPEC+ would not be able to reach the planned production increase level. , The lack of Russian supply is difficult to make up for, and crude oil has maintained a cumulative rise for more than a month throughout the week. Gold fell sharply under the blow of rising U.S. dollar and U.S. bond yields, with New York gold futures, which had the biggest gain in nearly four weeks on Thursday, posting its biggest drop in three weeks.