Markets In-Review – A Weekly Economic Recovery

■ U.S. 10 year bond yield surges 0.31% during week, on solid data

■ S&P500 (SPY) adds 3% during week Dow (SPY) surges by 3.8%

■ European equity lagging behind with DAX up 1.4%

■ EURUSD concludes volatile week on a negligible 0.22% gain

■ Oil prices gain USD 3.5 during week on volatile trading

Positive economic data retook the crown as primary market shifters, last week. Among the most dominant examples was the U.S. labor market data, on Friday, which saw January's Nonfarm Payrolls surge by 257K, and December's print  revised upwards from 252K to 329K. This helped Labor Force Participation gain 0.2%, to 62.9%, although Unemployment also added 0.1% to 5.7%.

Interpretation for this data has been positive. Very positive in fact, with markets now expecting the Fed to be able to implement that rate hike it's been talking about for a while. U.S. 2 year bond yields added 12bp during the day, to 0.64%. Similarly 10 year yields added 14 bp on Friday, summing a 31bp gain throughout the week, and are now at their highest since the middle of January. Further on the positive side, U.S. equity's interpretation for the forthcoming decrease of monetary stimulation was indeed negative, but not as much as you would expect, given the circumstances. The S&P500 lost -0.3% on Friday, but gained 3% during the week. Likewise, the Dow Jones also decreased by -0.3% on Friday, but concluded a weekly 3.8% surge, no less.

Some markets struggle more than others

In spite of the week being positive for most assets, it seems that some haven't gain as much as others. European markets opened the week with a very strong momentum due to estimation that a debt swap in Greece would help prevent its departure from the Eurozone. The DAX added 1.8% between Monday and Tuesday, and the IBEX35 gained a similar 1.9%. Sadly, that was pretty much it for European equities  as ongoing speculation that Greece will have to exit the Eurozone were augmented by the usual geopolitical concerns over Russia.  The DAX concluded the week on a mere 1.4% gain, the IBEX35 at 1.6%, the CAC40 at 1.9% and the FTSE 100 at +1.5%.

Obviously, the same factors affecting European stock markets were quite dominant with the Euro itself, only it didn't have the backing of global equity optimism. Reports of a decrease on the demands of Greece's government regarding its debt write-down have supported the Euro, on Tuesday, helping EURUSD spike approx 1.7%, and over the level of 1.15. Wednesday saw the ECB declare that it would no longer accept Greek bonds as collateral for funding, which led the Euro to weaken and EURUSD to nearly 1.13. The EURUSD rollercoaster continued on Thursday with the dissolving of no-collateral concerns to the EUR pushing EURUSD back to 1.15 and of course Friday's expectation for U.S. monetary tightening weakening the EUR, having EURUSD conclude the week at 1.1316, and a negligible 0.22% increase.

Oil's week was quite a positive, adding USD 3.5 per bbl, to USD 51.7 – the biggest weekly rally in approx. four years. It wasn't a smooth ride, however. Monday and Tuesday recorded a surge of USD 4.8 per bbl, on the global optimism from Greece. This quickly flipped as the U.S. Crude Oil Inventories were published on Wednesday to have increased by 6.3 million barrels from the previous week, beating analyst expectations for  a mere 3.9 bln increase. Oil then lost approx USD 5.2 per bbl from a peak of USD 52.7 on Wednesday, to a Thursday low of 47.4. But managed a recovery since, competing the aforementioned USD 3.5 weekly gain.