IAIC Market Update - June 7, 2021

(source: Bloomberg https://www.bloomberg.com/markets, MSCI https://www.msci.com/end-of-day-data-search and ARG Inc. analysis)

What happened last week?

• Canadian and global equities enjoyed another week of positive gains. For the second consecutive week the TSX was the best performing index gaining nearly 1%. The TSX also maintains its first-place position in Year-to-Date increases for 2021.
• This performance persisted despite the 68,000 job losses in Canada in May that pushed the unemployment rate to 8.2%.  Conversely, the U.S. added 559,000 jobs during the same period, which was below the consensus expectation of 670,000 jobs.
• In both countries the staging and scale of reopening weighed heavily on employment and jobs numbers. As Canada reopens jobs are expected to be added in large numbers during the second half of the year. In the U.S. May’s new job creation was double the number of April as the post-pandemic economic recovery continues.
• As of the end of May, Canada has 700,000 fewer jobs than pre-pandemic levels while the U.S. has nearly 8 million less jobs. There is significant opportunity to add jobs as each economy recovers. The level of unemployment will likely result in new jobs, not higher wages, as expansion occurs. This should help delay inflation, which would spur central bank action to increase interest rates.
  
  

What’s ahead for this week?

• In Canada, the most significant economic announcement for the upcoming week will be the Bank of Canada’s latest monetary policy announcement on Wednesday.
• In the U.S., inflation figures through the Consumer Price Index (CPI) for May are scheduled to be released. Wholesale inventories, Q1 flow of funds and May’s budget balance will also be announced during a relatively light week for domestic economic news.
• Globally, China will announce its trade surplus, money supply and foreign reserves. Japan and the Eurozone will deliver real GDP numbers. The European Central Bank will hold a policy meeting to analyze their economic indicators and global trend to influence upcoming monetary policy statements.  On Friday the Group of Severn (G7) countries will hold a summit meeting.