Equity markets were lower on Wednesday, given that economic data showed strength and that the QT program had started. While stocks attempted to rally in the early trading session, they faltered towards the end of the trading session.
Market participants are now assembling the different pieces of economic data and their outlook on inflation projection, which ultimately affect their view on the future rate hike trajectory.
💎Robust economic strength🗽
The latest ISM index hit 56.1, a rise from 55.4 in April. A reading above 50 indicates expansion activity. This is a result of growth in new orders. It is a sign that manufacturers still see strong demand despite the rising interest rates. Such a hot number can also hint at a possible extension of high inflation, and the Fed would still have to raise interest rates at a relatively faster rate than in the past.
Employment data came in strong too. The number of job openings remained at a record level in April, with about 11.4 million positions ready to be filled. There are approximately 1.9 openings for each unemployed person. Businesses are keen to hire and pay higher wages which often force them to increase prices and support inflation.
💈What the bond market says?🗝
The bond market sounds less interested in the two pieces of data. The 2 year Treasury yield, which is often a leading indicator of where the federal funds rate will be in the short term, rose to 2.66%.
Pika World will be expecting more data, especially Jobless Claim today and the May job reports revealed on Friday. We are looking at 328,000 jobs added, a fall from 428,000 jobs from those seen in April.
Markets typically want to see a strong figure but not too strong to cause anxiety for the general market.
More Stories
Consumer Discretionary Stocks Lead Losses, Hinting at Recessionary Concerns
Another record closing for S&P 500 and Nasdaq
A volatile trading session going into the quadruple witching