Global Stock Markets Rise and US Yields Fall

On Thursday, US yields declined, while global stock markets saw a boost because private payrolls data turned out to be lower-than-expected. This gave rise to hope that the US economy could be cooling down and this might drive the Federal Reserve to move back from its aggressive strategy when it comes to dealing with inflation and interest rates. On Thursday, the ADP National Employment Report was published and it highlighted that May saw private payrolls go up by almost 128,000 jobs. This was significantly lower than the 300,000 jobs that had been estimated, which indicated that labor demand might be slowing down.

On Friday, the Labor Department is scheduled to publish its jobs report, which will be more comprehensive. If it reaffirms the data of private payrolls, then it is likely that the Federal Reserve will reconsider its strategy of aggressively hiking interest rates in order to dampen the high inflation. Market analysts said that the situation was such that good news is bad news and vice versa. If the economy cools down, then the central bank would also slowdown the process of hiking interest rates. Tracking shares of almost 50 countries, the world equity index of the MSCI climbed by 1.42%.

Meanwhile, there was a 0.67% increase in the STOXX 600 index. As eyes turned towards the employment report and its potential impact on the interest rates, there was a decline in US Treasury yields after they had gained recently. On Thursday, two officials of the Federal Reserve reiterated that they would continue increase interest rates until they are able to tame inflation. This included the President of Cleveland Fed, Loretta Mester and Lael Brainard, the Vice Chair. There was a decline of 2.9149% in benchmark 10-year notes and of 2.6438% in two-year notes.

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The Dow and S&P index on Wall Street had all made losses in earlier sessions, but they also rallied and closed higher. The rebound was led by stocks in financial sectors, communication services, consumer discretionary and technology sectors. There was a 1.33% increase in the Dow Jones Industrial Average, as it reached 33,248.28. Meanwhile, the S&P 500 went up by 1.84% to reach 4,176.82. As for the Nasdaq Composite, it saw gains of 2.69% that brought it to 12,316.90. The substantial demand for fuel saw the US inventories of crude fall more than expected, pushing up oil prices.

However, OPEC+ has agreed to increase crude production in order to make up for the fall in Russian output. There was also a 1.69% rise in Brent futures, as they reached $118.26 per barrel. There was also a 1.97% increase in crude from West Texas Intermediate (WTI) in the US, as it reached $117.53. There was a slight fall in the US dollar, as better risk sentiment drove investors to reach out to riskier currencies. There was a 0.78% fall in the dollar index, while the euro climbed to $1.0746, marking a gain of 0.94%. A 1% increase in gold prices was brought about by a fall in the dollar.

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