Who Buys in the US Stock Market and Getting Ready for NFP

Yesterday, the main event was the Bank of England meeting results' announcement. The central bank raised its forecasts for the UK economy growth rate in 2021 from 5% to 7.5%. But at the same time, the estimates for 2022 were lowered from 7.25% to 5.75%. But the main result, perhaps, is still the news that the Bank of England has slowed down the pace of its stimulus program: the volume of weekly bond buybacks will be reduced to 3.4 billion pounds from the current pace of 4.4 billion pounds per week. True, the Central Bank hastened to declare that this is not a tightening of monetary policy.

The pound was in no hurry to grow on this news. Elections in the UK, including members of the Scottish Parliament, have become a concern this week. If in the new Parliament there is a critical mass of those wishing to fight for independence (and the probability of this is estimated by banks at 15-30%), then we witnesses another referendum for Scotland's independence, and this time there is a big chance of its success (if you believe the results polls that consistently show an Scotland's secession supporters excess from the UK).

Bank of America has recently released interesting figures for the US stock market. As it turns out, hedge funds have been very active in the US stock market in the past few weeks. By and large, the only group of customers buying stock were retail customers. All this very clearly fits into our understanding of what is happening: professionals tend to eschew the purchases or actively sell, and only amateurs continue to chase easy money and buy on an overbought market. This is a clear sign that the bubble is just around the corner.

The main event of this week and today is the publication of statistics on the US labor market. Of the entire data set, which includes unemployment, wage growth and the number of non-farm payrolls (NFP), today everyone will be interested in the last indicator. Markets count on a figure of a million or more. Considering that yesterday's initial applications for unemployment benefits showed a sharp decline in the indicator for the week, there is a great chance of seeing a number with 6 zeros in the NFP column.