Last week, the markets saw a U-turn from the selling we had, after the comments from Fed Chairman Powell and St Louis Federal Reserve President James Bullard from the week before.

On Tuesday, June, 22nd, 2021, Bloomberg reported Federal Reserve Chairman Jerome Powell’s written remarks for the House Select Subcommittee, on the Coronavirus crisis. He stated, the position of the picked-up inflation is transitory.

Adding hope to his testimony, he also said that job gains should pick up in the upcoming months, as vaccinations rise. 

These comments send the market into gear, as well as the reversal from the week before started to take shape. 

Then came Biden’s stimulus plan. A $579 billion infrastructure plan that will create millions of jobs, with The Republican Party’s (GOP) support.  

Democrats also intend to add another bill that would spend trillions more, on what Biden called “human infrastructure.” However, this has not got the GOP’s backing. 

This news sent the markets into high gear, creating new highs for the S&P and Nasdaq. 

Here are the closing levels on Friday. 
Dow Jones 34,443 +237.02 +0.69% 
S&P 500 4280 +14.21 +0.33% 
Nasdaq Comp 14360 -9.32 -0.06% 
US 10Y 1.524% 
VIX 15.62 -2.19% 

This coming Friday, we will get the U.S. payroll data for June. 

A median estimate in a Bloomberg survey, shows a 700,00 increase in June. 
We will have to remember that the previous estimate fell short. 

Regardless, as long as the number is not a disaster, the markets should trade positively on the back of last week’s rally. 

Be prepared for some pull backs, as traders take some profit and some short selling from players who feel valuations are stretched. 

I would not be surprised to see buying on the dips, should that happen. 
 

Source: CBOE, Reuters, Bloomberg – Powell, Biden, U.S. payroll

This commentary is written by James Gomes
James has been in the finance industry for over 30 years and most recently worked for a large US bank for more than 20 years.

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