Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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To say that last Friday’s NFP figures were a disappointment would be an understatement. Payrolls in the US actually declined by 23 thousand in July, falling far short of an expected rise of 80 thousand jobs. A six-figure miss is devastating in its own right, but revisions to the May and June numbers made matters even worse, amounting to a combined reduction of another 103 thousand. The unemployment rate declined from 4.2% to 4.1% but then again so did the labour force participation rate, so the drop is not necessarily cause for celebration. The broader U-6 unemployment rate, which includes some of the more disillusioned elements of the workforce, remained steady at 7.9%. Pretty grim at first glance, but upon closer inspection the report tells a slightly different story. The losses were primarily in the public sector, almost entirely contained to local government education, which shed 50k jobs last month. According to the latest report, the private sector in fact gained 30k jobs in July, which is nothing spectacular, but does not by any means indicate a collapsing labour market. The figures are not as alarming as they first seem and in fact reinforce the “low hire, low fire” narrative. With that said, prior revisions do point to a semi-stagnant situation, which will likely stay the Fed’s hand come the next rate decision. Board members will be in no hurry to raise interest rates while the jobs market shows any sign of fragility; in fact, the central bank may have been handed the precise excuse it needed not to.
The financial reshuffling that occurred on Friday was fairly straightforward: lesser chance of a rate hike in September; treasury yields dropped; weaker dollar; boost for dollar-denominated assets. The implied odds of a rate hike have indeed fallen to 55-45, while the dollar currency index sank to 99.6 by the end of last week. All three major indices edged higher on Friday, closing the chapter on what turned out to be a strong week for US stocks, with the Dow Jones gaining 3% over the five-day period, the S&P 500 ratcheting 3.6% higher and the Nasdaq 100 climbing 5.1%. Precious metals also ended the week on a high note, as gold punched $100 higher to surpass $4,340 while silver added a couple of dollars to its tally to reach $63.50 per ounce. The same macroeconomic flows that lifted everything else also spared some thought for the crypto markets, raising bitcoin to $65,000 over the weekend. The 1% move higher is in fact quite commendable given the disappointing news about the Clarity Act, which has officially failed to secure a vote before the summer recess, thereby delaying any potential progress to the 15th of September. It is not like crypto to miss an opportunity to dump, especially on bad news; the show of strength is notable.
The American labour market may have been the dominant topic on last week’s economic calendar, but this week’s theme turns to the inflation situation with the release of the latest CPI data on Wednesday. The headline inflation rate is expected to tick down to 3.4% year-over-year, while the core component is likewise expected to undergo a minor fall to 2.5%. The problem with recent inflation predictions is that they have been blown wide open by the huge fluctuations in crude oil prices, which continue to gyrate with the economic winds surrounding Iran. The dramatic drop in oil in June contributed to falling US consumer prices over the same month, but given the violent reversal seen in July, that trend may have already run its course. Although the Fed cares more about the PCE price index than the CPI, a sharp, unexpected drop may further taper rate hike expectations. July PPI figures complete the picture the following day, while retail sales and the Michigan Consumer Sentiment fill out the rest of the week. Speaking of inflation, the Reserve Bank of Australia is scheduled to deliver a rate decision on the Australian dollar on Tuesday, which is largely expected to result in a 4.35% hold. The RBA is in a bit of a tight spot at the moment; high inflation has been nagging at Australian consumers for a while now, breaching 4% a couple of times this year already, while interest rates are already high, leaving the central bank with nowhere to go. The earnings calendar is even drier than last week; the only name of note being Cisco Systems (CSCO) on Wednesday, which may provide a minor footnote to the AI conversation, although by and large markets are comfortable with the situation as it currently stands. Very little progress on the Iran front going into this week, with crude oil prices mostly stable and Asian markets cautiously optimistic as trading gets underway.
Дериватив болон хөшүүрэгтэй бүтээгдэхүүнээр арилжаа хийх нь өндөр эрсдэлтэй бөгөөд таны анхны хөрөнгө оруулалтаас давсан алдагдал хүлээх эрсдэлтэй. Арилжаа хийхээсээ өмнө манай Нөхцөл, болзол (T&C) болон Бүтээгдэхүүний мэдээллийн баримт бичиг (PDS)-ийг уншина уу.
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