Market Update

The equity markets exhibited unexpected calmness this week, despite a flurry of US economic data releases.
Economic data is known for its volatility, but its current state of flux is even more pronounced due to last year's unprecedented lockdowns and containment measures, which brought the global economy to a standstill. The ongoing economic reopening, characterized by pent-up demand, is further complicating data interpretation. Simultaneously, supply chain disruptions and bottlenecks are adding to the complexity.
The standout economic announcement of the week was the US core Personal Consumption Expenditure (PCE) reading, unveiled today, May 28, 2021. The PCE core price index is the Federal Reserve's preferred inflation gauge. In light of the recent significant increase in US Consumer Price Index (CPI) inflation, an unexpectedly high PCE reading might have prompted equity markets to question the Fed's commitment to ignoring these rises.
Fortunately, the inflation reading met expectations, suggesting that the current uptick in inflation is likely a temporary phenomenon. This should hopefully quell concerns in equity markets about impending tighter monetary conditions.
In other economic news, US durable goods orders recorded a 1.3% decline in April, falling short of economists' projections of a 0.8% rise. However, when examining the "ex-transportation" subcategory, which excludes aircraft and military spending and provides a better indication of business equipment investment, a different story emerges. April's reading not only exceeded expectations (1.0% versus 0.7%), but March's data was also revised significantly upward (from 1.9% to 3.2%).
Furthermore, Thursday's (May 27, 2021) US weekly jobless data continued its encouraging trend. Initial claims dropped to 406,000 from 444,000, while continuing claims decreased by nearly 100,000 to 3.642 million.
Looking ahead to the shortened week ahead, the focal point will be the US employment data following last month's significant miss. Additionally, other noteworthy releases include US ISM data, Eurozone Consumer Price Index (CPI) inflation, Eurozone unemployment figures, Eurozone and Japanese retail sales data, Chinese Purchasing Managers' Index (PMI) figures, and Japanese industrial production statistics.