Apart from French election fervor, the major focal point of financial markets last week was the US Federal Reserve. Official US payroll data came in much stronger than anticipated after job creation climbed by 211,000 for April. Despite the lower revision of March numbers, the unemployment rate unexpectedly fell to 4.40%, helping bolster the Federal Reserve’s rate hike case. Though the FOMC took no action on the policy front, they indicated that sluggish first quarter growth was just a passing factor, spurring a 78.50% likelihood of a June hike in Fed Funds futures according to the CME Group.
Moving towards Asia, Chinese fundamentals displayed some concerning developments, with both manufacturing and services PMI figures pulling back closer to the 50.0 expansionary-contractionary threshold. Both the official and Caixin figures highlighted the same trends, which should worry policymakers working to cool momentum in the housing market. Apart from China, European fundamentals were mixed at best after unemployment remained on hold at 9.50% while GDP managed to accelerate modestly to 0.50% expansion on a quarterly basis. Commodities slipped lower throughout the week, with gold prices falling back below the $1250 per troy ounce level even after the Euro hit multi-month highs against the US dollar.