CFD Markets News and Forecasts — 28-05-2021

ActionForex reports that analysts at TD Bank Financial Group discuss the April data on personal income and outlays in the U.S.

"Personal income declined by 13.1% month-on-month in April, reporting a slightly better performance than the 14.8% decrease anticipated by the consensus. Not surprisingly, the decline was due to the pullback in other government social benefits, which account for roughly $340 billion in stimulus checks distributed last month."

"Personal spending grew 0.5% month-on-month in April, on par with the consensus call. Spending on services rose by 1.1% in April, decelerating slightly from the downwardly revised 2.1% gain of the previous month. Gains were led by recreation services and food services & accommodations. Goods spending declined by 0.5% in April, with non-durables dropping by 1.3% m/m."

"The overall PCE price deflator rose by 0.5% m/m and 3.6% y/y in April, softer on a monthly basis than the consensus (0.6%) but stronger on a yearly basis (3.5%). The Fed’s preferred measure of inflation – core PCE price index –  rose by 0.7% m/m and 3.1% y/y, a hair above the consensus expectation for 0.6% m/m and 3.0% y/y respectively."

"Today’s report shows consumption shifting away from goods and back toward services, signaling a return to “normalcy”. Over the course of the pandemic, the services share of overall consumer spending declined from 70% to 65%. It is now moving back into the driver’s seat. This reflects the broader reopening of the economy."

"At 3.1%, core PCE price inflation is looking hot. Yet, measured against the weakest point last year, this pace is unlikely to be sustained long. Still, with signs of stronger economic growth and inflation likely to remain above 2%, it is becoming increasingly difficult for the Fed to avoid at least talking about talking about removing monetary policy accommodation."

The final reading for the May Reuters/Michigan index of consumer sentiment came in at 82.9 compared to a preliminary reading of 82.8 and the April final reading of 88.3. This was the lowest reading in three months.

Economists had forecast the index to be revised to 82.9.

According to the report, the index of consumer expectations fell 4.7 percent m-o-m to 78.8 from April’s final reading of 82.7, while the index of the current economic conditions plunged 8.0 percent m-o-m to 89.4 from April’s final reading of 97.2.

“It is hardly surprising that the resurgent strength of the economy produced more immediate gains in demand than supply, causing consumers to expect a surge in inflation,” noted Richard Curtin, Surveys of Consumers chief economist. “Record proportions of consumers reported higher prices across a wide range of discretionary purchases, including homes, vehicles, and household durables - the average change in May vastly exceeds all prior monthly changes.”

MNI Indicators’ report revealed on Friday that business activity in Chicago grew further in May, recording its eleventh straight month of expansion.

The MNI Chicago Business Barometer, also known as Chicago purchasing manager's index (PMI) came in at 75.2 in May, up from an unrevised 72.1 in April. This was the highest reading since November 1973.

Economists had forecast the index to drop to 68.0.

A reading above 50 indicates improving conditions, while a reading below this level shows worsening of the situation.

According to the report, Order Backlogs (+7.7 points, to the highest level since December 1983) and Order Backlogs (+7.5 points, hitting a 70-year high) demonstrated the largest gains, while Employment (-6.5 points) slipped back into contraction territory. Elsewhere, Production (-2.3 points) slowed and Inventories dropped to a 9-month low, while Supplier Deliveries (+5.9 points) rose to a 47-year high, indicating that supply chain constraints remain a serious problem. On the price front, Prices paid at the factory gate decreased 3.1 points in May, down from April’s 41-year high.

U.S. stock-index futures rose on Friday, as investors digested the April data on the U.S. core PCE price index, the Federal Reserve's preferred measure of inflation, a slew of solid corporate earnings and reports about a $6 trillion budget proposal from the U.S. President Joe Biden.

Global Stocks:

FXStreet reports that the Credit Suisse analyst team suggests that above 4171/69, the S&P 500 Index can maintain an immediate upward bias within the broader consolidation range – with daily MACD potentially set to turn higher again to suggest upward momentum is starting to return.

“Support is seen at 4183 initially, with 4171/69 now ideally holding to maintain a slight upward bias in the range, reinforced by the fact we may be set to see daily MACD momentum turn higher again. 

“Resistance stays seen at 4213 initially, above which can clear the way for a move back to the 4238 record high, above which we see resistance seen at 4260 next.” 

(company / ticker / price / change ($/%) / volume)

Advanced Micro (AMD) resumed with a Buy at The Benchmark Company; target $100

Intel (INTC) resumed with a Hold at The Benchmark Company; target $55

Johnson & Johnson (JNJ) resumed with an Overweight at Morgan Stanley; target $187

HP (HPQ) target raised to $30 from $27 at Cowen 

Salesforce (CRM) target raised to $290 from $275 at Monness Crespi & Hardt

Apple (AAPL) downgraded to Sell from Neutral at New Street; target $90  

The Commerce Department reported on Friday that consumer spending in the U.S. rose 0.5 percent m-o-m in April after a revised 4.7 percent m-o-m jump in March (originally a 4.2 percent m-o-m increase). Economists had forecast the reading to show a 0.5 percent m-o-m gain.

Meanwhile, consumer income tumbled 13.1 percent m-o-m in April, following a revised 20.9 percent m-o-m climb in the previous month (originally a 21.1 percent m-o-m surge). Economists had forecast a 14.1 percent m-o-m decline.

The April drop in personal income primarily reflected a decrease in government social benefits. Within government social benefits, "other" social benefits fell as economic impact payments made to individuals from the American Rescue Plan Act of 2021 continued, but at a lower level than in March. Unemployment insurance also declined, led by decreases in payments from the Pandemic Unemployment Compensation program.

The personal consumption expenditures (PCE) price index, excluding the volatile categories of food and energy, which is the Fed's preferred inflation measure, increased 0.7 percent m-o-m in April, following an unrevised 0.4 percent m-o-m advance in March. Economists had projected the index would increase 0.6 percent m-o-m.

In the 12 months through April, the core PCE surged 3.1 percent, accelerating from a revised 1.9 percent in the 12 months through March (originally a 1.8 percent jump). Economists had forecast an advance of 2.9 percent y-o-y. This was the highest reading since the 1990s and exceeded the Fed’s 2-percent target.

USD rose against its major rivals in the European session on Friday, as the benchmark 10-year Treasury yields held above 1.61%, as investors awaited the release of the April data on the core PCE price index (12:30 GMT), the Federal Reserve's preferred measure of inflation, which could provide cues on the near-term direction of the U.S. monetary policy.

The U.S. Dollar Index (DXY), measuring the U.S. currency's value relative to a basket of foreign currencies, increased 0.39% to 90.33, rebounding further from the four-month lows it reached earlier in the week.

Hotter-than-anticipated April's U.S. CPI data, which were released earlier this month, raised worries that accelerating inflation might prompt the Federal Reserve to pull back on its stimulus for the U.S. economy. But the Fed's officials have been playing down the risk of rising prices, reiterating the view that any spike in inflation will be temporary.

Market participants also awaited the announcement of a $6 trillion budget proposal by the U.S. President Joe Biden later today. The New York Times (NYT) reported on Thursday that Biden is to unveil his budget plans on Friday, which calls for around $6 trillion in federal spending for the 2022 fiscal year. 

EUR/USD: Threat of a top remains with key support seen at 1.2160/59 - Credit Suisse

FXStreet reports that the Credit Suisse analyst team notes that EUR/USD remains under pressure and a break below 1.2160/59 would mark a near-term top to warn of a fall back to 1.2053/51.

“With daily RSI momentum holding a clear bearish divergence the threat of a top remains. Below 1.2160/59 would see this confirmed to clear the way for a fresh swing lower within the broader range of the past few months.” 

“We would see support at 1.2134 initially ahead of 1.2108/03 and then 1.2053/51 – the mid-May low and 38.2% retracement of the March/May rally and ‘measured top objective’.” 

“Resistance stays seen at 1.2216/17 initially, above which is needed to ease the immediate downside bias, with a break above 1.2241 needed to ease the topping threat for a move back to 1.2264/67.

FXStreet reports that Quek Ser Leang at UOB Group’s Global Economics & Markets Research assesses the prospect for USD/CNH.

“In the FX Technical section of our Quarterly Global Outlook published on 19 Mar 2021 (when USD/CNH was trading at 6.4980), we held the view that ‘the recovery in USD/CNH has plenty of room, both price and time-wise to extend further even though the major resistance at 6.6700 could be out of reach’."

“While our expectation for recovery was not wrong as USD/CNH rose to 6.5878, it was unable to hold on to its gains. The subsequent decline cracked 6.4400 in early May and the breach of the year-to-date low of 6.4009 on Tuesday (25 May) sent USD/CNH plummeting. Weekly MACD is beginning to turn negative and the risk within these couple of months is on the downside. However, until weekly MACD is deeper in negative territory, it is premature to expect the start of long-term downtrend.”

“In order to maintain the current downward momentum, USD/CNH should not move above the declining trend-line resistance (currently at 6.4800). On a shorter-term note, 6.4400 is already quite a strong level. On the downside, there is a minor support 6.3300 but the stronger support is at 6.3000.”

FXStreet notes that AUD/USD is trading heavily and is back at the key price lows at 0.7688/75, with daily MACD close to bearishly crossing below zero. A move below here would confirm an in-range top to signal a fall back towards 0.7532, according to analysts at Credit Suisse.

“AUD/USD is trading very heavily and is weighing on key support levels the 0.7688/75 lows, with daily MACD close to turning lower. A break below here would complete an intraday top to turn the risks lower within the broader range, with next supports at 0.7588/86, with the size of the potential top suggesting a move to the year to date lows at 0.7532, which we expect to prove a solid floor, particularly with the 200-day average just below at 0.7521.” 

“Resistance stays at 0.7814/18, above which should reassert an upside bias and resolve the range higher, with the next level then seen at 0.7892/7905, above which would reassert the broader medium-term uptrend for a move back to the 0.8000/07 high.” 

Dell (DELL) reported Q1 FY 2021 earnings of $2.13 per share (versus $1.34 per share in Q1 FY 2020), beating analysts’ consensus estimate of $1.62 per share.

The company’s quarterly revenues amounted to $24.499 bln (+11.6% y/y), beating analysts’ consensus estimate of $23.352 bln.

DELL closed Thursday's trading session at $99.70 (0.00%).

FXStreet reports that Lee Sue Ann, an economist at UOB Group, comments on the latest RBNZ meeting.

“The Reserve Bank of New Zealand (RBNZ), at its May meeting, decided to maintain the current stimulatory level of monetary settings - the Official Cash Rate (OCR) at 0.25%, and the Large Scale Asset Purchase (LSAP) and Funding for Lending (FLP) programmes unchanged.”

“In the accompanying media release, the RBNZ stated that the Committee agreed to maintain its current stimulatory monetary settings until it is confident that consumer price inflation will be sustained at the 2% per annum target midpoint and that employment is at or above its maximum sustainable level... However, unlike April’s media release, the RBNZ omitted the statement: “The Committee also agreed that it was prepared to lower the OCR if required”.”

“In all, we expect the RBNZ will continue to strike a cautious tone and stress that considerable monetary stimulus remains appropriate and is expected to remain so for quite some time. Despite the more positive tone at the latest meeting, we believe that policymakers at the RBNZ would want to wait for the true economic picture to become clearer, and stands ready to come out swinging if underlying momentum threatens to turn. Our call, for now, remains for the OCR to be unchanged at 0.25% until at least early 2023.”

Salesforce (CRM) reported Q1 FY 2021 earnings of $1.21 per share (versus $0.70 per share in Q1 FY 2020), beating analysts’ consensus estimate of $0.88 per share.

The company’s quarterly revenues amounted to $5.963 bln (+22.6% y/y), beating analysts’ consensus estimate of $5.890 bln.

The company also issued upside guidance for Q2, projecting EPS of $0.91-0.92 versus analysts’ consensus estimate of $0.86 and revenues of $6.22-6.23 bln versus analysts’ consensus estimate of $6.16.

For the full year, it sees EPS of $3.79-3.81 versus analysts’ consensus estimate of $3.45 and revenues of $25.90-26.00 bln versus analysts’ consensus estimate of $25.75 bln.

CRM rose to $236.89 (+4.90%) in pre-market trading.

FXStreet reports that USD/JPY has completed a base above 109.79 and analysts at Credit Suisse look for strength back to the high for the year at 110.97.

“USD/JPY surged sharply higher yesterday and this has seen key price resistance from the mid-May highs at 109.75/79 cleared. This sees a base complete to resolve the near-term range higher to clear the way for strength back to challenge the late March high and potential downtrend from February 2020 at 110.79/97.” 

“Whilst a fresh setback from 110.79/97 should be allowed for our bias is for a break above here in due course to expose more important resistance at 111.95/112.40.” 

HP (HPQ) reported Q2 FY 2021 earnings of $0.93 per share (versus $0.51 per share in Q2 FY 2020), beating analysts’ consensus estimate of $0.89 per share.

The company’s quarterly revenues amounted to $15.877 bln (+27.3% y/y), beating analysts’ consensus estimate of $14.960 bln.

The company also issues upside guidance for Q3 FY 2021, projecting EPS of $0.81-0.85 versus analysts’ consensus estimate of $0.75. For the full FY 2021, it guided EPS of $3.40-3.50 versus analysts’ consensus estimate of $3.30.

HPQ fell to $30.49 (-5.02%) in pre-market trading.

FXStreet reports that economists at MUFG Bank expect cable to suffer some downside pressure in the short-term.

“MPC member Gertjan Vleighe mentioned the scenario of an earlier than expected rate hike by the BoE. The speech was a detailed and interesting look at what bond yields are telling us about investor expectations and concluded with three key scenarios – the central one being similar to the MPC’s central projection outlined in the May MPR. The prospect of a rate hike by Q2 2022 presents a lot of ‘ifs and buts’ with this scenario that suggest this bounce in GBP could easily correct.”

“While we have a bullish view on the pound, the catalyst for this bounce yesterday may not be sustained. We also need to monitor the very near-term risk of the Indian variant of COVID-19 potentially derailing the full reversal from lockdown scheduled for 21st June. We could well see some reversal of GBP gains over the short-term.”

Reuters reports that Bank of England Chief Economist Andy Haldane has warned there is a chance that cost pressures faced by British companies lead to high prices that become embedded in pay demands.

"There's again a chance that those price pressures could get embedded in pay packets and then we have something closer - not on the same scale remotely - but something closer to the sort of 'wagey-pricey' spiral that we've seen at times in the past, the Seventies and Eighties," Haldane said.

According to the report from European Commission, In May 2021, the Economic Sentiment Indicator (ESI) increased again strongly, gaining 4.0 points in both the EU and the EA compared to April.1 At 113.9 (EU) / 114.5 (EA) points, the ESI scores markedly above its long-term average and pre-pandemic level, close to its December 2017 peak. The Employment Expectations Indicator (EEI) also saw an additional strong increase (+2.4 points to 110.3 in the EU and +2.9 points to 110.1 in the euro area), bringing it further above its long-term average in both areas.

In the EU, the ESI’s increase was driven by improving confidence in the services sector, but all other surveyed business sectors (i.e. industry, retail trade, construction) and consumers recorded an improvement. The ESI is well above its long-term average, and rose markedly in all of the six largest EU economies, mostly so in Italy (+11.0), followed by Poland (+5.1), France (+5.0), the Netherlands (+3.2), Germany (+2.8) and Spain (+2.3).

According to the report from Istat, in April 2021, compared with the previous month, industrial producer prices increased by 1.1%. On domestic market producer prices increased by 1.2%, on non-domestic market they increased by 0.9%.

Over the last three months, compared to the previous three months, industrial producer prices increased by 2.6% (+2.9% for the domestic market, +1.9% for the non-domestic market).

In April 2021, compared with April 2020, industrial producer prices increased by 6.5% (+7.9% on domestic market, +3.1% on foreign market).

In April 2021, construction producer prices of Residential buildings and non-residential buildings increased by 0.7% on monthly basis and by 2.3% on annual basis; construction producer prices of Roads and railways increased by 0.6% compared with the previous month and increased by 2.2% on annual basis.

Over the last three months, compared to the previous three months, construction producer prices increased by 0.9% for Residential buildings and non-residential buildings and by 1.0% for Roads and railways.

FXStreet reports that despite additional oil supply, strategists at ANZ Bank expect further drawdowns in global inventories. Sequential drawdowns in the second and third quarters will firm up prices.

“The outlook for road transportation fuels is improving strongly ahead of the northern hemisphere’s summer driving season. High vaccination rates have seen restrictions ease and mobility increase in the US and Europe. In fact, gasoline demand has now exceeded 2019 levels in many areas. This may be partly offset by weakness in Asia,which is suffering a wave of COVID-19. This should offset concerns of additional Iranian oil hitting the market.” 

“OPEC is likely to take a cautious approach at next week’s meeting. We expect the scheduled increase of 840kb/d in July to be ratified. However,the group is unlikely to provide any guidance on output in August. “

“Another 1mb/d of oil would certainly slow the current drain on inventories. This will ultimately limit the price rise. We maintain our year-end forecast of $75/bbl for Brent crude.”

Reuters reports that Goldman Sachs said it no longer saw China as the center of commodities pricing, reasoning the pace of demand recovery in developed markets suggested Beijing as a buyer has been crowded out by Western consumers.

"The bullish commodity thesis is neither about Chinese speculators nor Chinese demand growth. It is about scarcity and the DM-led recovery," the bank said.

While commodity prices fell after Chinese warnings over onshore speculation, "the fundamental path in key commodities such as oil, copper and soybeans remains orientated towards incremental tightness in H2, with scant evidence of a supply response sufficient to derail this bull market."

The market is beginning to reflect this, as copper prices are increasingly driven by Western manufacturing data rather their Chinese counterparts, it said.

"This is a role reversal from the bull market of the 2000's, with China now the incumbent consumer as the U.S. was when emerging Chinese demand squeezed out marginal U.S consumers," Goldman said.

According to the report from KOF Economic Research Agency, the economic barometer once again reaches a historical high. The slight decline that the barometer underwent in the second half of 2020 has been replaced by continuing strong increases in the spring of this year. Once again, the barometer is well above its long-​term average. The outlook for the Swiss economy for the middle of 2021 can be regarded as very positive, provided that the containment of the virus continues to progress.

The KOF Economic Barometer stands at 143.2 points in May, 6.8 points higher than in April (revised from 134.0 to 136.4 points). The sharp increase is driven by bundles of indicators from the manufacturing sector and foreign demand. An additional positive signal is sent by indicators for accommodation and food service activities followed by indicators for the other services sector. By contrast, slight negative impulses are sent by private consumption.

The positive developments within the manufacturing sector are largely driven by indicators for the textile and clothing industry followed by indicators for the chemicals, pharmaceuticals and plastics sector. Sub-​indicators for the electrical industry and the machine and vehicle construction industry also contribute to this development. By contrast, the paper and printing sector recorded slightly negative developments.

Within the goods producing sector (manufacturing and construction) indicators for assessing the competitive situation and production capacities point in a positive direction. Indicators on employment and the export opportunities also send a positive signal. By contrast, sub-​indicators for the purchase of intermediate products send a negative signal.

During today's Asian trading, the US dollar rose against the euro and the yen thanks to strong statistics on the US economy published the day before.

Data on the US labor market showed a more significant than expected decline in the number of applications for unemployment benefits in the country. The number of new applications last week decreased by 39 thousand, to 406 thousand, the lowest since the beginning of the COVID-19 pandemic. Meanwhile, the U.S. Department of Commerce's estimate of first-quarter GDP growth was left at 6.4% on an annualized basis.

On Friday, the US Department of Commerce will release April data on spending and income of the US population. As part of this report, the dynamics of the PCE Core Index, a key inflation indicator tracked by the Federal Reserve System, is traditionally published. The consensus forecast of experts provides for the growth of the PCE Core index in April by 2.9%, the highest since 1993.

Traders are closely watching the inflation figures, believing that the acceleration in consumer price growth, together with the improvement in the labor market and the economy as a whole, may force the Federal Reserve System (Fed) to start scaling back stimulus earlier than markets expected.

The ICE index, which tracks the dollar's performance against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona), rose 0.19%.

According to the report from INSEE, in Q1 2021, gross domestic product (GDP) in volume terms fell slightly:  -0.1% after -1.5% in Q4 2020. Economists had expected a 0.4% increase. It stood 4.7% below its level in Q4 2019, which was the last quarter before the Covid-19 crisis.

Households’ consumption expenditure was almost stable (+0.1% after -5.6%) and remained well below its pre-crisis level (-6.8% compared to Q4 2019). Gross fixed capital formation (GFCF) increased slightly (+0.2% after +1.7%) and was closer to its pre-crisis level (-2.3%). Overall, final domestic demand excluding inventories contributed by +0.1 points to GDP growth this quarter.

Imports remained relatively dynamic (+1.1% after +2.2%), while exports fell slightly (-0.2% after +4.9%). Imports were thus 6.9% below their pre-crisis level, while exports remained further away (-9.9%). Overall, the external balance contributed negatively to GDP growth: -0.4 points, after +0.7 points. Conversely, changes in inventories made a positive contribution to GDP growth (+0.2 points after +0.6 points).

EUR/USD

Resistance levels (open interest**, contracts)

$1.2271 (1749)

$1.2242 (3540)

$1.2223 (2016)

Price at time of writing this review: $1.2174

Support levels (open interest**, contracts):

$1.2130 (929)

$1.2091 (1733)

$1.2045 (3348)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date June, 4 is 68965 contracts (according to data from May, 27) with the maximum number of contracts with strike price $1,2100 (3613);

GBP/USD

$1.4323 (972)

$1.4263 (1365)

$1.4230 (1863)

Price at time of writing this review: $1.4186

Support levels (open interest**, contracts):

$1.4082 (596)

$1.4039 (297)

$1.3994 (285)

Comments:

- Overall open interest on the CALL options with the expiration date June, 4 is 21634 contracts, with the maximum number of contracts with strike price $1,4350 (2949);

- Overall open interest on the PUT options with the expiration date June, 4 is 33395 contracts, with the maximum number of contracts with strike price $1,3100 (3957);

- The ratio of PUT/CALL was 1.54 versus 1.56 from the previous trading day according to data from May, 27

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.

According to the report from the Federal Statistical Office (Destatis), the index of import prices increased by 10.3% in April 2021 compared with the corresponding month of the preceding year. This has been the highest year-on-year-change since December 2010 (+10.3%). In March 2021 and in February 2021 the annual rates of change were +6.9% and +1.4%, respectively. From March 2021 to April 2021 the index rose by 1.4%.

Energy imports were 101.3% more expensive in April 2021 than in April 2020. This high rate of annual change derives from the very low prices in April 2020. This increase is due to the extremely low price level of the comparative month (base effect). The largest influence on the year-on-year rate of energy price increase had crude oil with a plus of 198.0%, mineral oil products with a plus of 76.6 % and natural gas with a plus of 57.6 %. In addition, the price of electricity increased significantly by 209.6%.

The index of import prices, excluding crude oil and mineral oil products, increased by 6.0% in April 2021 compared with April 2020 and in comparison with March 2021 it rose by 1.5%.

The index of export prices increased by 3.3% in April 2021 compared with the corresponding month of the preceding year. This has been the highest year-on-year-change since May 2011 (+3.4%). In March 2021 and in February 2021 the annual rates of change were +2.2% and +0.7%, respectively. From March 2021 to April 2021 the index rose by 0.8%.

FXStreet reports that in opinion of FX Strategists at UOB Group, Cable faces the prospects of further upside once 1.4235 is cleared in the next weeks.

Next 1-3 weeks: “Yesterday, we indicated that ‘downward momentum is beginning to improve and GBP could edge lower to 1.4055’. We added, ‘the chance for a sustained decline below 1.4055 is not high but it would increase further unless GBP moves above the ‘strong resistance’ level at 1.4180’. Our view was proven wrong as GBP surged past 1.4180 and hit a high of 1.4220. Strong shorter-term momentum suggests that GBP could test 1.4235 but GBP has to close above this major resistance before a sustained advance can be expected. In order to maintain the rapid build-up in momentum, any pullback in GBP should hold above 1.4110 (‘strong support’ level). Looking ahead, the next resistance levels above 1.4235 are at 1.4265 and 1.4290.”

CNBC reports that according to the Institute of International Finance (IIF), U.S. banks are likely to report “record level” earnings in 2021 as the American economy recovers and financial markets remain buoyant.

Tim Adams, chief executive of the IIF, said that the improving economy will help bank lending and fee income to pick up while more investing activity will boost trading revenue.

“I think we’re going to see record-level earnings this year so it’s a good year for banks. We see it in the bank stocks, and I think it’ll continue to reflect those underlying, really strong fundamentals for at least the rest of this year,” Adams told.

Many of the big U.S. banks last month reported first-quarter earnings that exceeded analysts’ expectations on several financial metrics.    

The improved performance of banks comes as the U.S. economy recovers from the Covid-19 pandemic slump. The recovery spurred worries among investors that a quicker rise in inflation could prompt the Federal Reserve to tighten monetary policy sooner than it had hoped to.

Adams said it’s time the Federal Reserve starts talking about the possibility of tapering monetary policy. But there’s been little indication that Fed Chair Jerome Powell would do that soon, he added.