Sun Life Guaranteed Investment Funds (GIFs) - Effective April 24, 2023, the Deferred Sales Charge (DSC) option and Low Load (LL) Sales Charge option will no longer be available for new purchases. Switching from a fund previously purchased under DSC or LL Sales Charge options to other DSC or LL funds, will continue to be permitted.
A review of the week's top global economic and capital markets news.
As of noon on Friday, global equities were flat on the week as markets digested both the debt ceiling bill and conflicting U.S. economic data. The yield on the U.S. 10-year Treasury note dropped, falling to 3.67%, down nearly 15 basis points on the week. The price of a barrel of West Texas Intermediate Crude dropped from $72.75 to $70.10. The Cboe Volatility Index (VIX) faded lower to 15.20.
U.S. payrolls surpass expectations
U.S. non-farm payrolls surged by 339,000 in May compared to market expectations of 195,000. U.S. Treasury yields moved higher as a result, reflecting the expectation that a strong job market will pressure the U.S. Federal Reserve to maintain a restrictive policy. However, a rise in the labour force, particularly in the 25- to 64-year-old cohort, resulted in an increase in the unemployment rate. That rate rose to 3.7% from 3.5%, suggesting that new workers may have entered the workforce but have yet to land employment.
Debt ceiling bill passes, averting disaster
A bill codifying an agreement reached over the weekend between the White House and Speaker of the House Kevin McCarthy passed the U.S. House of Representatives and the U.S. Senate, landing it on President Biden’s desk on Friday, where it is expected to be signed into law. The Fiscal Responsibility Act suspends the debt limit through 1 January 2025, kicking that particular can down the road until after the 2024 presidential election. The fiscal drag from the package is estimated at about 0.2% of GDP.
China considers measures to support economy
The Chinese government is working on new policies to support an economy that has underwhelmed following the lifting of COVID-related restrictions this spring. While there was an initial bump in economic activity, it failed to gather the expected momentum. High debt loads within the property sector remain a key concern for the Chinese economy, which is heavily reliant on the property sector for economic growth.
Fed may skip a June hike, pending data
President Joe Biden’s nominee for Vice Chair of the U.S. Federal Reserve, sitting Governor Philip Jefferson, said Wednesday that skipping a rate hike at the June FOMC meeting would allow the Fed time to assess incoming data, but said a pause would not indicate that rates are at their peak. Inflation is too high and progress has slowed recently, Jefferson told a conference in Washington. Philadelphia Fed President Patrick Harker, a voting member on this year’s FOMC, suggested that with policy in restrictive territory, the Fed should skip a hike in June and that if more tightening is needed it can be done every other meeting. However, contradictory payroll and employment figures on Friday now further cloud the Fed’s path.
U.S. crude added to Brent index
U.S. crude oil prices were added to the calculation of the Brent crude benchmark on 1 June. Brent measures waterborne crude and represents about three-quarters of the world’s traded oil. Until now, Brent was priced off British and Norwegian North Sea crudes. The U.S. exports around 3.7 million barrels of oil per day, so its inclusion in the index is expected to have substantial impact on, and perhaps dominate, global pricing.
Sources: MFS research, Wall Street Journal, Financial Times, Reuters, Bloomberg News, FactSet Research, CNBC.com.
This commentary was first published in the United States by MFS and is distributed in Canada by SLGI Asset Management Inc., with permission.
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