Wall Street Caps a Week of ‘Everything Rally’: Markets Wrap

It’s been a week when everything rallied — from emerging markets to global bonds and the S&P 500 — all buoyed by faith that the Federal Reserve is winning the fight against inflation.

(Bloomberg) — It’s been a week when everything rallied — from emerging markets to global bonds and the S&P 500 — all buoyed by faith that the Federal Reserve is winning the fight against inflation. 

While trading was subdued on Friday, investors are finishing the week with blockbuster gains across asset classes. MSCI’s global stock benchmark has leapt 3.5% in the past five days, the biggest advance since November. The dollar notched a big decline this week and the US two-year rate, the most sensitive to short-term policy moves, dropped as much as 30 basis points. 

Among bullish investors, there’s a hope that the US is heading toward a “Goldilocks scenario” with inflation quickly easing while the economy continues to grow. To be sure, Federal Reserve officials have continued to warn that more than one interest rate hike may still be necessary. The earnings season also kicks off in the US today with lenders JPMorgan Chase & Co., Wells Fargo and Citigroup Inc. reporting.

“The market has been partying like it’s 1999 this week,” said Jim Reid, a strategist at Deutsche Bank AG. “It’s hard to stand in the way of that narrative at the moment regardless of what eventually happens.”

Treasuries fell on Friday, trimming their biggest two-day gain since early May. The yield on two-year notes was up four basis points to 4.67%, holding near the lowest level in one month.

Among individual stock movers in Europe, Nokia Oyj slumped more than 8% after the Finnish vendor of 5G equipment lowered its guidance. Ericsson dropped as much as 7.2% as analysts pointed to a weak margin outlook for the Swedish telecom equipment maker. Swiss money manager Partners Group Holding AG gained more than 5% after assets under management rose in the first half.

In commodities, oil headed for a third weekly gain as supply disruptions in Africa and a reduction in shipments from Russia tightened the market. Gold was set for the best week since April.

“The Fed has already won the battle against inflation,” Raffaele Bertoni, head of debt capital markets at Gulf Investment Corp., said on Bloomberg Television. “If they want to be serious in maintaining inflation under control, the focus should be more on the reduction of the balance sheet or the quantitative tightening rather than increasing rates further.”

Fed Bank of San Francisco President Mary Daly, however, told CNBC Thursday that it’s too soon for policymakers to say they have done enough to return US inflation to their target. Fed Governor Christopher Waller also said he expects the US central bank will need to raise rates twice more this year to bring inflation down to its target.

Traders are now looking to earnings reports to reignite the rally. The focus is going to be mostly on the corporate outlooks given that beating profit expectations seems to be a low hurdle — even as some estimates have started to rise slowly.

“Given that consensus expectations appear reasonable and valuations are already rich (not only in tech), only strong beats are likely to result in substantial price gains, while even small misses may lead to sharper drops,” said Wolf von Rotberg, an equity strategist at Bank J Safra Sarasin.

Meanwhile, most stock indexes advanced in Asia. Stocks fluctuated in Japan as the yen headed for a seven-day winning streak, which would mark its best performance since 2018.

The offshore yuan ticked higher. China has ample foreign exchange reserves and will “resolutely” prevent wild swings in the yuan exchange rate, People’s Bank of China Deputy Governor Liu Guoqiang said at a briefing Friday. The currency’s short-term movement cannot be predicted accurately, but it hasn’t deviated from its fundamentals, Liu added.

Key events this week:

  • US University of Michigan consumer sentiment, Friday
  • US banks kick off earnings, Friday

Some of the main moves in markets:


  • The Stoxx Europe 600 was little changed as of 9:55 a.m. London time
  • S&P 500 futures were little changed
  • Nasdaq 100 futures were little changed
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index rose 0.5%
  • The MSCI Emerging Markets Index rose 0.8%


  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.1232
  • The Japanese yen fell 0.2% to 138.28 per dollar
  • The offshore yuan was little changed at 7.1437 per dollar
  • The British pound fell 0.1% to $1.3120


  • Bitcoin fell 0.4% to $31,247.38
  • Ether rose 0.7% to $2,000.52


  • The yield on 10-year Treasuries advanced three basis points to 3.79%
  • Germany’s 10-year yield was little changed at 2.49%
  • Britain’s 10-year yield was little changed at 4.43%


  • Brent crude was little changed
  • Spot gold fell 0.2% to $1,956.48 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Yumi Teso and Tassia Sipahutar.

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