Markets to Start the Week on the Front Foot
Asian markets are set to kick off the week on the front foot after key jobs numbers in the US on Friday indicated that the Fed may have peaked in its hiking cycle. The headline non-farms number exceeded expectations, but the unemployment rate jumped by 0.3%. The Dow rose 0.33%, the S&P 0.18% and the Nasdaq took a bit of a breather, closing slightly lower by 0.02%. US treasury yields popped higher with the benchmark 10-year gaining 7bps to trade at 4.18% and the dollar gained against the majors closing the day up 0.4% against the usual basket. Oil gained 0.3% with WTI up to $85.8/b and Gold remained little changed.
Data Taking the Pressure off the Fed
As usual for the first Friday of the month, it was all eyes on the US and the latest jobs data on Friday and investors received a bit of a mixed bag which led to a hopeful reaction from markets. Both the FOMC and investors are looking for signs that there is a soft landing ahead for the US economy and last week’s numbers gave a good indication of this. The Fed has been looking for signs that the job market is cooling, and this showed a marked increase in the unemployment rate whilst the headline figure gained more than expected showing continued resilience in the market. We still have 16 days to go before the September meeting, but markets are pricing just a 7% chance of a hike, they are pricing in a 32% chance of a raise in November however and this will be greatly dependent on how data comes out in the next couple of months.
Quiet Start to the Trading Week Today
It is a very quiet day in terms of data releases and market events today and many investors will be looking for rangebound trading conditions for the majority of the day given that both the US and Canadian markets are having a bank holiday. There are a couple of releases of interest to note with an inflation gauge due out in Australia and Swiss GDP and German Trade Balance numbers in the European session followed much later by ECB President Christine LaGarde speaking in London but apart from those expect most of the big players to be keeping their powder dry for the rest of the week.
