A positive end to last week, S&P500 up 1.7% Friday, US 10Y Treasury yields up 4bps to 0.68% and 2Y treasuries rising 1.8bps from the record low set Thursday. We should see better trading sentiment at the start of the week in Asia on the back of trade war calm and the improved US market outlook.

Easy liquidity and the amount of available Fed firepower seems set to continue to propel stocks higher. Cash on the sidelines continues to suggest that it is a matter of time before Wall Street gets stopped into equities rather than getting stopped out.

Forecasting today’s economy is not easy, while perhaps the biggest reason for that is it is not a normal recession; hence there is no blueprint for playing off so no one can be sure about how the recovery will unfold.

Therefore, it could be a spin of the roulette wheel from here on out, but so far, the ivorine continues to land on the green (0) and pays out big to aggressive risk-takers. As the trend is always the market best friend until it is not.

There will be no rest for the weary. After shrugging off a historic plunge in April employment, and market participants will need to digest further record-setting monthly declines in core CPI.

US Fed remains committed to boost the economy

However, US Fed Chair Powell’s appearance on Wednesday may overshadow what is likely to be a significant weakness in this week’s economic data. One thing that we can be sure he is certainly not going to walk back any of the Fed extraordinary stimulus measures if anything he could lay it down even thicker.

Indeed, this is when guidance could count in spades, just throw out a massive number and worry about the details later.

Regionally China is not going to sit back and watch PMIs anchoring to the 50 marks. The PBoC may cut RRR for some banks and lower the MLF rate or reverse repo rate again as early as May.

US-China tensions failed to elicit fireworks in USDCNH and China equities. And on back of the better China trade data, some optimism is building into this week’s China data dump on Friday, which could see an active rebound in China retail sales and industrial production suggesting risk could trade on an even keel this week.

Well, as even of a keel as could be expected as economies around the world attempt to reconnect after a stressful month in lockdown as traders keenly monitor real-time data around energy consumption, transport traffic, and foot traffic to gauge investor confidence during the easing of mobility restrictions process.

US Payrolls

It is no secret that unemployment numbers right now are soaring, and while US payrolls for April recorded a 20.5 million decline in employment. That compared to a consensus estimate looking for a 22 million drop, but it seems illogical to describe the outcome as better than expected.

But since no one can tell how severe a pounding the coronavirus pandemic will deal the world’s biggest economy, the numbers did not provide much of a steer with traders now focused beyond lockdown.

The question that matters most is, where does it go from here.?

On one level, the data makes sense while the number is eye-popping and nonsensical at the same time. As it is the future that matters. It was widely expected this was going to be the worst report in history as well as that it would be riddled with inaccuracies and estimation issues.

In going forward, there is hope within this labyrinth of statistical perversity. The vast majority of job losers anticipate being recalled. Temporary layoffs on this scale have never happened (like almost every data point in this jobs report), and the hope is that it leads to a rather rapid return to work.

International markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp