US equities were stronger again on Monday, the S&P raising a further 1.2% as investors continued to digest the extraordinary beat on May payrolls reported on Friday. To recap: headline US nonfarm payrolls rose by a little over 2.5mn in May with private payrolls increasing by a bit over 3mn. Still, the economy's critical issue is whether people will spend the savings they accumulated during the lockdown.
On that front, figures showing that foot traffic is starting to recover at retail and recreational establishments is positive; those are the economic sectors that have seen the most significant job losses and could turn around quicker than expected.
The market has continued its rerating in terms of absolute levels, but also from a rotation perspective. The market move higher has been sponsored by volume and breadth and has not offered many chances of participation through pullbacks. The scale and speed of the movements have been painful if positioned incorrectly.
Greater risk-taking in equity markets (S&P 500 now positive YTD) is seeing it reflected in FX markets with commodity-exporting currencies leading the charge.
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Investors take a glass half full approach while looking out six months and running on monetary and fiscal fumes.