Several fundamental factors will have a strong impact on financial markets in this first week of June, as uncertainty surrounding the trade war remains high. However, there was some good news last Friday, with US PCE inflation continuing to move towards the Fed's target despite tariffs.
This week, two fundamental factors are under close scrutiny: US labor market figures (NFP report) and, of course, as every week, the current phase of trade diplomacy.
1) US PCE inflation is still trending towards 2% and is not rebounding despite the trade war
US inflation and employment are the two key variables for considering a resumption of the decline in the federal funds rate, with Trump receiving Powell at the White House at the end of last week. However, the Fed has reiterated its independence and the future direction of its monetary policy will continue to be guided by specific macroeconomic objectives: bringing inflation back to 2% and neutralizing any rise in unemployment.
Good news! Last Friday's update on US inflation according to the PCE price index showed that tariffs did not cause inflation to rise in April. On the contrary, the nominal inflation rate is now 2.1% and core inflation is 2.5%. Disinflation therefore seems set to continue in the US despite the tariffs, but this still needs to be confirmed.
2) The market does not expect any rate cuts before September
Despite these good PCE inflation figures for April (PCE being the Fed's preferred measure of inflation) and pressure on the Fed from the Trump administration, the market does not expect the federal funds rate to resume its downward trend before the monetary policy decision in September.
The debate remains open for the July 30 monetary policy meeting, so the upcoming updates on US employment (NFP report) and inflation will have a decisive impact.
3) The NFP report on Friday, June 6, will be crucial this week!
In this first week of June, the US labor market will be the fundamental highlight of the week. All US employment statistics will be updated, with the NFP report on Friday, June 6 being the most important. While it appears that the trade war has not yet pushed inflation up, what about the labor market? Remember that the US unemployment rate is 4.2% of the labor force and that the Fed's alert threshold is 4.4% of the labor force. If it turns out that US companies have had to lay off workers due to the economic uncertainty linked to the trade war, this could accelerate the upcoming schedule for lowering US federal funds rates.
Finally, remember that the market is hoping for a phone call between Trump and the Chinese president to finally reach a trade agreement between China and the US. This is a fundamental thread to follow every day on the stock market.
DISCLAIMER:
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions.
This content is not intended to manipulate the market or encourage any specific financial behavior.
Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results.
Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content.
The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services.
Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Capital Markets Limited regulated by CySEC (Cyprus), Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC) and Swissquote South Africa (Pty) Ltd supervised by the FSCA.
Products and services of Swissquote are only intended for those permitted to receive them under local law.
All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade.
Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties.
The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.
This week, two fundamental factors are under close scrutiny: US labor market figures (NFP report) and, of course, as every week, the current phase of trade diplomacy.
1) US PCE inflation is still trending towards 2% and is not rebounding despite the trade war
US inflation and employment are the two key variables for considering a resumption of the decline in the federal funds rate, with Trump receiving Powell at the White House at the end of last week. However, the Fed has reiterated its independence and the future direction of its monetary policy will continue to be guided by specific macroeconomic objectives: bringing inflation back to 2% and neutralizing any rise in unemployment.
Good news! Last Friday's update on US inflation according to the PCE price index showed that tariffs did not cause inflation to rise in April. On the contrary, the nominal inflation rate is now 2.1% and core inflation is 2.5%. Disinflation therefore seems set to continue in the US despite the tariffs, but this still needs to be confirmed.
2) The market does not expect any rate cuts before September
Despite these good PCE inflation figures for April (PCE being the Fed's preferred measure of inflation) and pressure on the Fed from the Trump administration, the market does not expect the federal funds rate to resume its downward trend before the monetary policy decision in September.
The debate remains open for the July 30 monetary policy meeting, so the upcoming updates on US employment (NFP report) and inflation will have a decisive impact.
3) The NFP report on Friday, June 6, will be crucial this week!
In this first week of June, the US labor market will be the fundamental highlight of the week. All US employment statistics will be updated, with the NFP report on Friday, June 6 being the most important. While it appears that the trade war has not yet pushed inflation up, what about the labor market? Remember that the US unemployment rate is 4.2% of the labor force and that the Fed's alert threshold is 4.4% of the labor force. If it turns out that US companies have had to lay off workers due to the economic uncertainty linked to the trade war, this could accelerate the upcoming schedule for lowering US federal funds rates.
Finally, remember that the market is hoping for a phone call between Trump and the Chinese president to finally reach a trade agreement between China and the US. This is a fundamental thread to follow every day on the stock market.
DISCLAIMER:
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions.
This content is not intended to manipulate the market or encourage any specific financial behavior.
Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results.
Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content.
The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services.
Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Capital Markets Limited regulated by CySEC (Cyprus), Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC) and Swissquote South Africa (Pty) Ltd supervised by the FSCA.
Products and services of Swissquote are only intended for those permitted to receive them under local law.
All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade.
Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties.
The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.
This content is written by Vincent Ganne for Swissquote.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
This content is written by Vincent Ganne for Swissquote.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only and does not constitute investment, legal or tax advice.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.