US Markets Smashed After Non-Farms – Nasdaq down 2.25%
US markets took a big hit on Friday after non-farm payroll data came in under expectations and previous numbers were revised to significantly lower levels. The three major US indices all took big hits, the Nasdaq leading the way down, dropping 2.24% to 20,650, the S&P lost 1.60% to move back to 6,238, and the Dow fell 1.23% to 43,588. US Treasury yields had a huge day, the 2-year dropping 27.6 basis points to 3.681% and the 10-year losing 14.1 basis points to 4.216%. The dollar dropped hard after the data, the DXY down 0.83% to 99.14. Oil prices also dropped after OPEC+ advised of further production increases, Brent down 2.83% to $69.67 and WTI down 2.79% to $67.33. Gold jumped strongly on the back of haven demand and the weaker dollar, gaining 2.23% on the day to close at $3,362.03 an ounce.
Fed Rate Cut Expectations Jump After Data
Expectations for an interest rate cut from the Federal Reserve Bank have jumped significantly after weaker jobs numbers on Friday. Employers added just 73k new jobs last month, much lower than the 106k that the market was expecting, and a huge revision to previous months’ data – down to 14k from 147k – led to big moves in markets. The market is now pricing in 63 basis points of cuts from the Fed before the end of the year, up from 34 points before the data, with a September cut now being priced in as a near 90% chance. This was a huge move after a more hawkish close to the Fed meeting on Wednesday, and traders will be looking closely at further data in the coming weeks to see if it flips expectations again before the September update.
Quiet Calendar Day to Start the Week
It is a quiet start to the week on the macroeconomic calendar today as investors and traders alike look to assess Friday’s jobs update out of the US. Australian markets are closed in the Asian session today, which may affect liquidity in some markets, and there is nothing else of note on the calendar to move markets. The big data release of the day comes out early in the London session: Swiss CPI data is due out, with the market expecting to see a 0.2% month-on-month decrease, down from last month’s 0.2% rise, and traders are expecting to see moves in the franc around the event. Canadian markets are also on holiday today, which could affect liquidity once the New York session opens. Again, there are no significant events scheduled today; however, traders are expecting to see more reaction to Friday’s employment updates as the session progresses.
