Having started the year betting on up to half-a-dozen interest rate cuts, then having to undo those bets as stronger-than-expected US economic data and Fed comments pointed at the possibility of one or even no cut in rates this year, investors’ heads have been in a spin for the last few weeks.

Cue the return on 3 May of the ‘Goldilocks’ scenario, where the US economy turns out to be moderating so it is not too hot and not too cold but just right.

Stocks were already in a good mood thanks to Apple (AAPL:NASDAQ) announcing overnight the biggest buyback in history ($110 billion) and Amgen (AMGN:NASDAQ) releasing positive trial data for its new anti-obesity drug, sending shares in both companies surging pre-market.

US non-farm payrolls, which have previously come in way above forecast at over 300,000, showed the economy created 175,000 new jobs last month, below the 240,000 estimate, while the unemployment rate rose.

As one commentator observed, it was almost as if Wall Street had scripted the report.

The jobs figure was followed by more positive (ie mildly negative) news as the S&P Global US Services PMI showed a slower rise in services activity, a renewed fall in new orders and the first drop in employment for 46 months.

This week sees the release of UK retail sales and housing market data followed by the Bank of England’s rate-setting meeting on Thursday where, while no change is expected, attention is likely to focus on the split of opinion among board members on when and how much to cut later this year.

Next week sees the publication of revised UK and Eurozone first-quarter GDP along with US April core producer and consumer prices, housing starts and industrial production, although none of these are expected to influence the market to any great degree. 

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