The nonfarm payrolls report for May on Friday will be the economic data centerpiece in the holiday-shortened week as traders get back to work after Memorial Day weekend.
Markets will also get reports this week on S&P/Case-Shiller home prices, Chicago PMI, consumer confidence, ADP employment and factory orders, among others.
“Since the financial crisis of 2008/2009, when all risky assets first fell together and then rebounded together, it has become fashionable to describe the behavior of markets in simple ‘risk-on’ or ‘risk-off’ terms,” said David Kelly, chief market strategist at JP Morgan Funds, in a recent note.
“Investors are willing to take on more risk when news on the economy and corporate profits is positive and uncertainty is diminishing and reduce risk when the opposite holds,” he said. “To the extent that markets are being driven by this logic rather than long-term projections and valuation issues, the next few weeks still look challenging for the ‘risk-on’ trade.”