The markets were largely in a holding pattern last week. Janet Yellen's speech, which was much anticipated by investors offered little hints on the forward guidance for the FOMC meeting this coming week. Speaking at the World Affairs Council of Philadelphia on Tuesday, the Fed Governor sounded broadly optimistic on the outlook of the US economy. More importantly, the Fed chair said that one shouldn't look too closely at a single month's job report. That said, the markets scaled back the odds of a rate hike in June. There was not much of economic data from the US for the remainder of the week.
In Europe, the big news was the ECB's corporate sector purchase program (CSPP). Starting June 8th, the ECB began purchasing corporate sector bonds as part of the policy decision made earlier in March. Looking at the hefty 980 billion corporate debt markets, the ECB is expected to slowly scale up its purchases, estimated to be around 5 billion euro in asset purchases per month. On Thursday, Mario Draghi, speaking at an economic forum in Brussels said that while the central bank was committed to reaching its inflation target, governments needed to come together as well to boost fiscal spending. The euro, which remained largely flat until then started to decline.
In other central bank decisions this week, the RBA left interest rate unchanged on Tuesday, in a widely expected move. The central bank also sounded comfortable leaving things where they are, highlighting the domestic pickup in growth, aptly referencing to the better than expected Q1 GDP numbers released a week ago.
The RBNZ also met over the week on Thursday but left interest rate at 2.25%, in a decision that was too close to call. The RBNZ surprised with its neutral tone in the monetary policy statement and surprisingly did not reference the exchange rate appreciation in the NZ dollar. The Kiwi, surged above $0.71 briefly by Thursday’s close on the RBNZ’s inaction.
On the commodity front, WTI Crude oil futures edged higher this week on continued supply disruptions in Nigeria. Oil prices briefly touched the $51 handle before retreating by Friday's session. Brent Crude oil prices were also seen pulling back after posting a yearly high above $52.50 a barrel. Gold prices continued to follow through from last week with prices briefly testing the $1270 level by Friday. Prices remained flat for the first two days of the week before the bullish rally started on Wednesday which saw gold prices rise 1.52% on the day.