U.S. Indices closed mixed, as stocks were choppy, bonds rallied, and the Dollar was soft after another weak US jobs report. The headline print missed analyst expectations at 22k, with three of the last four months printing below the breakeven estimate (see more below). The data confirmed the labour market concerns after the July jobs report, alongside rising Initial Claims and falling JOLTS. The data has cemented expectations for a 25bps rate cut in September, and bolstered rate cut bets through year-end. Stocks initially rallied on the report on the prospects of more Fed easing but sold off after the opening bell as fears over the state of the economy took focus. Elsewhere, price action was clearer in T-notes, which rallied across the curve by between 6 and 10bps while the Dollar took a hit as both the prospect of easing monetary policy and economic concerns support this type of price action. The Swiss Franc outperformed in FX while the Canadian Dollar lagged the U.S. Dollar, following a woeful Canadian jobs report, too. Oil prices sold off in response to reports that Saudi Arabia wants OPEC+ to speed up its next oil production increase, but no decision has been made, and it is not clear whether any increase would be agreed on as soon as Sunday or in later months. Gold prices hit fresh highs but failed to breach USD 3,600/oz in the wake of the NFP report. Elsewhere, aside from NFP, on trade Commerce Secretary Lutnick and FT (citing an unpublished memo), said Trump will direct Japan’s USD 550 billion investment in the US. Meanwhile, US President Trump threatened 301 tariffs on the EU over unfair penalties on Google (GOOGL) and Apple (AAPL). Trump also warned that substantial chip tariffs are coming, but signalled Apple (AAPL) and others will be safe during his dinner with tech CEOs at the White House, where Meta (META) told Trump it would invest USD 600 billion in the US through 2028. On USMCA, Trump also reportedly plans to renegotiate the deal. Attention this week turns to the US CPI and PPI reports, BLS preliminary. Benchmark revisions, ECB rate decision and French no-confidence vote. NFP: Overall, a weak report. Headline NFP showed just 22k jobs added in August, well below the 75k forecast and down from the prior 79k. The two-month net revisions were -21k, following the chunky -258k seen in the prior report. The headline number is below the bottom end of some of the FOMC’s estimates of the breakeven rate; Musalem had suggested it is between 30-85k. When accounting for revisions, three of the last four prints have been below that bottom estimate. Meanwhile, the June report was revised to see a -13k print, the first negative print since December 2020. The Unemployment Rate ticked up to 4.3%, in line with analyst expectations, but it was accompanied by an increase in the participation rate, adding to the softness of the labour market. However, it remains two-tenths below the year-end Fed median projection, albeit this will be updated at the September 17th meeting. On this, the soft labour market report has cemented expectations for a 25bps rate cut and will likely persuade some of the more hawkish voting members on the FOMC (Musalem and Schmid) that a rate cut is needed in September, albeit they may want to wait until the inflation data next week before making a final call. 2025 voter, Goolsbee, speaking post-data, said he is still undecided in September, noting he needs to assess the inflation side of the mandate, particularly to make sure the pickup in services inflation was just a blip. Elsewhere in the report, Oxford Economics highlighted that other areas in the report were also weak, with the increase in the number of permanent job losers and the duration of unemployment. With the report largely cementing a September rate cut from the Fed, Wall Street Jornalist Timiraos said that weak hiring makes it easier for policymakers to agree on a 25bps rate cut at their meeting in two weeks, but further muddies the debate over the pace of cuts thereafter. Waller has suggested (pre-NFP) that the pace of rate cuts will be dictated by incoming data. Meanwhile, Oxford Economics expects the Fed to pause in October, before cutting again in December. Money markets are nearly fully pricing in three rate cuts this year, with 70bps of easing priced, which fully prices two rate cuts, with an 80% probability of a third. Gooslbee, the Chicago Fed President kept true to his tone before the August NFP report on the possibility of a rate cut in September, saying he still is undecided, and needs to assess the inflation side of the mandate, making sure that the services inflation uptick is a blip. “Services inflation is not something that would likely come from tariffs”. Goolsbee highlighted that job growth is below the breakeven rate (he has not said what he thinks it is) and that numbers could be artificially lower due to immigration changes. Elsewhere, Gold surged, closing at another new all-time high with a gain of 1.28% while Oil was slammed, ending Friday’s session with a loss of 2.3%.
To mark my 3250th issue of TraderNoble Daily Commentary I am offering a special 2-Year Rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day to demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 260 points on Friday and is now ahead by 222 points for September after ending August with a gain of 3362 points after closing July with a gain of 3753 points after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
Recent Comments