On Thursday we had the 169th OPEC meeting and the ECB monetary policy announcement. These were followed on Friday by a shock to the market with US unemployment data missing expectations on the downside.
The markets came through relatively unscathed on Thursday. The ECB, as expected, announced its monetary policy remaining unchanged. They revised their GDP and inflation outlook upwards but warned that we should expect interest rates at “present or lower levels for an extended period of time.”
Following on from this, we had the OPEC meeting in Vienna where, although leaders again failed to agree an output ceiling, Brent oil continued its march forward, closing above $50 a barrel for the first time since November.
Friday though saw a disappointment in the US employment data and a tumbling in both the odds of a rate hike, as measured by the Fed Fund futures, and the Dollar index as a result. The unemployment rate fell to 4.7%, its lowest rate since 2007 but this was mainly due to people leaving the work force; not necessarily good news. The important number though was the US non-farm payrolls which showed the creation of just 38,000 jobs over the month against an expected 160,000.
Clearly this will be of concern to the Fed who have recently moved to a mildly hawkish rhetoric in an attempt to prepare the market for a summer rate hike. On Friday morning the odds of a June rate hike sat at 20.6% and the odds of a July rate rise at 58.4%. As of Monday morning they are at 2.8% and 31.3% respectively.
On Monday 6th, we have a speech from the Chair of the Fed, Janet Yellen , where investors will be wondering how she will explain the recent shift to a hawkish tone on the back of Friday’s dreadful figures.