Following weak US employment data, expectations of a Fed interest rate cut strengthened this month. This optimism boosted stocks on Monday and kept Treasury yields low. US S&P 500 futures rose 0.2%, while European stock markets increased 0.2% and Asian markets rose 0.7%.
The first political development of the week occurred in Japan. Following the resignation of Prime Minister Shigeru Ishiba, the yen weakened, long-term bonds fell, and stock markets rose.
Investors believe this uncertainty could lead the BOJ to postpone interest rate hikes. In France, Prime Minister Francois Bayrou is facing a vote of confidence and is expected to lose. This raises the question of whether Macron will appoint a new prime minister or call for elections. Although French assets have recovered slightly, uncertainty persists. The dollar fell to its lowest level in six weeks following weak US employment data on Friday. However, political developments in France and Japan are limiting further dollar depreciation. The US 10-year Treasury yield is trading at 4.08%, while Wednesday’s CPI data will be critical for the Fed’s move. On the commodities side, gold hit a new record high, rising to $3,616 per ounce. Oil prices also rose 1.6% after OPEC+’s decision to gradually increase production.
