Are risk assets shaping up for a summer rally?

That's the question investors are asking themselves after Friday's latest nonfarm payrolls report.

It's raising hopes that the U.S. economy is on a more stable footing than previously thought.

A trader works on the floor of the New York Stock Exchange.
Michael Nagle | Bloomberg | Getty Images
A trader works on the floor of the New York Stock Exchange.

Good news for risk sentiment provided the Federal Reserve holds the line in commentary this week with no less than 12 speakers on the agenda. Not a problem according to the The Lindsey Group's Peter Boockvar who said in a note on Friday that the "three month average job gain of about 150,000 doesn't scream rate hike in light of what is going on overseas and in the context of a slowing trend."

UBS strategist Daniel Waldman agrees saying in a note this morning that "a growth relief that is not accompanied by significantly tighter policy expectations should be positive for equities … at some level of equity rally, the Fed is likely to turn more hawkish, though we appear far from that level."

Equity investors sent U.S. markets up more than 1 percent across the board on Friday with the S&P 500 ending the week at 2129 points, less than a point below its record high.

U.S. equities have now recouped all losses following the U.K. referendum vote and I wonder whether we now set this issue aside at least until the U.K gets a new government.

One senior banker told me last week that he believes a Brexit could take five or more years to enact. If that's the case then investors are going to have to learn to compartmentalize the uncertainty and that's perhaps in part what we are seeing today.

But only in part. We shouldn't underplay the short term support central banks have provided here too. In fact 17 separate central banks across the world have taken action since the vote to allay the fears of both consumers and investors. Never mind the support already in play.

Let's add to that comments this week from Japanese Prime Minister Abe hinting at further stimulus to support the domestic economy and fight deflation. There are high hopes of a rate cut from the Bank of England on Thursday too.

Ursula Marchioni, chief strategist of Ishares EMEA at Blackrock, told CNBC this week that "investors seem to be positioning for imminent and coordinated central bank stimulus, a stance which has been implied by the central bank speeches since the Brexit vote and will be supportive of equities in the near-term."

So does that mean we can now focus on fundamentals once again? Well this week brings the start of the second-quarter earnings season, with markets poised for a fifth quarter of consecutive earnings per share declines. Each quarter we see a similar pattern where analysts revise their forecast so low in aggregate they under-estimate performance.

According to Factset, over the past four years on average, actual earnings reported by S&P 500 companies have exceeded estimated earnings by 4.0 percent. If that's the case this quarter once again we could perhaps argue there's scope for equity upside.

Not everyone would agree. Many strategists expect the market to remain volatile, and those like Goldman Sachs remain neutral on equities, warnings stocks remain vulnerable to shocks. Bank of America Merrill Lynch also expect the S&P to trade lower, reaching 2,000 points by year-end.

One canary in the coal mine could be the level of bond prices. I know you are sick of hearing it but it was very interesting to see bonds rally in line with equities on Friday. I think it's fair to argue that with $12 trillion of negative yielding bonds globally, U.S. Treasurys look particularly attractive with what's going on elsewhere. At some point though that's going to pose a problem for equity investors as the U.S. economy recovers.

I'd argue that bond market repricing is an issue for the coming months though and as we collect more economic data. For now the one thing we can all agree on is that hopes of a quiet summer in 2016 have once again been vanquished.