Champagne is pouring in the markets. What will the week bring?

June started with strong increases in the stock markets. The strength of the bulls pushed the WIG20 to almost the highest level since last spring. US indices were also at local highs. The sources of this market optimism can be found not only in the bill suspending the debt limit signed by President Biden, but also in the suggestions of Fed regarding the likely June pause in the cycle of interest rate hikes.

Good data from the US labor market

Friday's NFP data turned out to be surprisingly strong - the report showed 339 thousand. new jobs created in May, of which 283 in the private sector alone. The unemployment rate increased noticeably (from 3,4 to 3,7%), but investors remember its earlier, unexpected decline. The JOLTS job vacancies data also performed well, confirming the extraordinary strength of the US labor market.

Among the numerous hawkish statements of Fed members last week, the voices of Harker and Jefferson sounded the strongest, suggesting a possible pause in the cycle of Fed interest rate hikes, which hit the value of the dollar. The reserve is currently facing a problem because if it allows investors to raise interest rates, which ultimately will not happen, it may have a problem with continuing the hawkish narrative. The market remains undecided, still pricing in a hike in June, but sees a better chance for continuation of the cycle in July.

Due to the situation in China, the global PMI level is retreating to quite weak - but certainly not recessionary - levels. The high level of inventories from the period of the pandemic is weighing on industry, while demand in services remains quite strong. This underlines the important role central banks have to play in the coming months. Will demand collapse?

In today's webinar:

• Heavily mixed data from the global economy
• Why such good market sentiment?
• Fed wants pause - but will the data allow?

About the host

Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.

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