Monday 12 July 2021 11:26 am

City A.M. TV: A market snapshot

Last week’s price action left more questions unresolved than answered. Was Thursday’s weakness the start of a new pullback? Was Friday’s rally a dead cat bounce, or the start of a renewed uptrend? Have US 10 year bonds now put in their yield low?

Indeed in the UK the pattern was similar with marked weakness on Thursday and a bounce in the indices on Friday. In both instances, though, neither the FTSE100 nor the mid-cap FTSE250 made a new intraday high. The FTSE100, meanwhile, remains resolutely range bound as it has been since early May. With that, the jury remains out and discerning the direction of markets over the next few weeks remains challenging. Key short term market timing models, though, provide some insights (see video link below).

Key events this week are primarily focussed on the US. Over in Europe and Asia, macro data and key events are light on the calendar. There is some key data out of Europe (German & French CPI on Tuesday, Euro zone CPI on Friday), as well as new car sales (Friday), and some out of Asia including Chinese retail sales, home prices & GDP data (on Thursday). The main focus, though, is likely to be US data and events. US small business optimism and inflation reads are out on Tuesday.

On Wednesday and Thursday Powell delivers his semi-annual monetary policy report to Congress (i.e. the old Humphrey Hawkins testimony), while Thursday sees the release of the Philly Fed business conditions index with retail sales and Michigan sentiment due out on Friday. In the UK, inflation (Wednesday) and employment data (Thursday) should dominate.