Stocks and Dollar Surge After Huge Non-Farms Print
US markets took off on Friday after employment data blew out investors’ expectations, the headline non-Farms Payroll number was expected to show an increase of 187k jobs but came in at +353K whilst Average Earnings numbers also exceeded expectations. All three of the major US indices had good days, the Dow finishing up 0.35%, the S&P closing at another record high after adding 1.07% and the Nasdaq rising 1.74%, the latter two greatly assisted by stellar earnings results from Meta and Amazon. The US dollar hit a seven-week high on the index after the job’s numbers print and US treasury yields shot higher, the 10-year adding 16 basis points to hit 4.03% and the 2-year gaining 18 basis points to trade back to 4.37%. Oil dropped nearly 2% with Brent back to $77.33 a barrel and WTI trading back around $72.28, and Gold dropped off recent highs closing the day around the $2,035/oz level.
Strong Jobs Numbers May Have the Fed on Hold for Longer
Friday’s strong employment numbers may put a bit of a spanner in the works for investors looking for an early start to the Fed’s easing cycle in 2024. All three of the data releases on Friday pointed to a very resilient jobs market in the US which could – and some economists would argue, should – lead the Fed keeping rates at elevated levels for longer than the market is pricing. Some traders are looking more closely at the Average Hourly Earnings numbers which came in at a monthly increase of 0.6% against the expected 0.3% and see this as a strong indication of continued wage inflation. Fed Chair Jerome Powell is speaking on prime-time TV in the US early in the trading day today and having already pushed back any expectations of a March cut, anything more hawkish from him could see the greenback start to break into fresh higher ranges for the year.
Lively Start to the Trading Week
Traders are looking at a lively start to the trading week once the Asian session kicks into action this morning, not only are they getting a look at fresh levels after a big employment data update out of the US on Friday, but they are also due for an update from the Fed Chair Jerome Powell as he speaks on 60 minutes on Sunday night stateside. Later in the day the focus will move to China for the release of the latest Caixin Services PMI number, with expectations for a 53.0 print. There is little of note due out in the European session to disrupt momentum, however traders will be looking closely at the first data release of the week in the US, the ISM Services PMI number which is expected to come in around the 52.0 level with any topside result likely to add to the already strong dollar environment.
