Week Ending June 4th, 2021

Jobs report was the main attraction last week. The employment situation report for the month of May showed that the job situation is improving at slower pace than being anticipated. US economy added only 559,000 jobs in May lower than the consensus expectations of 670,000. I think this new jobs numbers point to the fact that April’s Jobs reports was not a fluke. And the economic recovery is not as smooth as being anticipated by many. 

Wages rose 0.5% in May, the third strongest month over month gain over the last year. Rising wages are good for households but on the other hand rising hourly earnings adds to inflation worries. Moreover wages growth is pointing towards kind of persistent inflation if the growth trend continues.

Markets shrugged off Federal Reserve’s announcement last week that it would start selling corporate bonds and ETFs it bought to contain pandemic’s economic fallout. These bonds and ETFs  are distinct from Fed’s balance sheet debt and amounts to $13.7 Billion approximately. I think it is kind of a micro step towards tapering.

However the jobs report was kind of good news for markets as it provides more time to Fed to ponder over change in policy stance.