The US equities market closed around 2% higher last week, with the S&P 500 ending above 6,000 points for the first time since February. Corporate credit also traded stronger, with spreads 2 to 10bps tighter. Main drivers included strong economic data, hopes for a US-China trade deal, and a rebound in Tesla shares after a public spat with President Trump.
The Labor Department reported a better-than-expected increase in payroll jobs in May, as well as an unemployment rate of 4.2% as expected, which eased concerns about the economy. Meanwhile, shares of Tesla, which had fallen sharply after a public feud between Musk and Trump, rebounded somewhat later in the week, reinforcing the "risk-on" tone in the market.
For this upcoming week, economic data release scrutiny will pick up on Wednesday with the Consumer Price Index (CPI), and on Thursday with the Producer Price Index (PPI), which will also coincide with auctions for the 10-year and 30-year Treasury Bonds. Market demand for debt issued by the US Government will start to be monitored even more closely, as possible concerns about a higher fiscal deficit due to Trump's new tax bill may increase. New developments on China-US trade relations will also be closely watched.
