The US nonfarm payroll came in better than expected at 261K vs 205K estimate. The prior month was revised higher to 315K from 263K. So stronger 300K growth month on month with the revision included. The average hourly earnings came in at 0.4% vs 0.3%. So that was higher. The unemployment rate moved higher to 3.7% but coming off record low levels is 3.7% much different than 3.5%? It still is a strong employment market.
The dollar went higher right?
Not so fast.
Initially, the move was to the upside, but stocks in pre-market trading hung in there. Then the dollar, perhaps seeing stocks not going down, started to sell. The stocks starting to see the dollar fall, and it moved higher. Yields moved around, but the shorter end started to come down helped by some Fed talk from Fed’s Collins who said it is time for the Fed to shift focus from size of rate hikes to ultimate level, and later said that all options should be on the table for the Fed’s next meeting including a 25 basis point hike and a 75 basis point hike.
Fed’s Barkin said
- Now real rates are positive so you could credibly say we have our foot on the brake
Hmmmm. OK. Although are rates at 4.65% for the 2 year and the Fed funds at 4% positive real rates? I thought PCE and CPI and other measures of inflation were still higher.
Anyway, it wasn’t until September 20, that the Fed policy was “restrictive” (i.e., above 2.5%) and this last hike did move further into restrictive policy, but employment remains strong. Before September 20, you can argue that policy was still expansionary.
Fed Chair Powell was less positive about the prospects for a peak rate soon this week.
Time will tell.
The markets today wanted all to end, with stops moving higher, the yield curve steeper, and the dollar lower. So that’s what it did.
Looking at the strongest to the weakest of the major currencies, the AUD is ending the day where it began, as the stronges of the major currencies. In fact the AUDUSD pair had its biggest one day advance from a percentage basis going back to 2010 (up 3.07%).
The USD was the weakest of the major currencies with declines of 1.12% (versus the JPY) to 3.07% (vs the AUD). .
In the US equity market, the major indices moved higher initially at the open, and then gave back all the gains and traded lower, before rebounding and closing higher for the day.
- Dow industrial average closed up 403.53 points or 1.26% at 32404.79
- S&P closed up 50.72 points or 1.36% at 3770.60
- Nasdaq closed up 132.32 points or 1.28% at 10475.26
- Russell 2000 closed up 20.13 points or 1.13% at 1799.86
For the week, the major indices still closed lower.
- Dow industrial average fell -1.39%
- S&P index fell -3.34%
- NASDAQ index tumbled 5.65%
- Russell 2000 fell -2.54%
In the US debt market today, the yield curve steepened with the shorter end lower and the longer end higher.:
- 2 year is trading at 4.66%, -4.1 basis points
- 5 year is trading at 4.332% -1.9 basis points
- 10 year is trading at 4.164% +4.1 basis points
- 30 year is trading at 4.257% +10.5 basis points
In other markets as the week comes to a close:
- Spot gold is trading up $51 on the back of the week dollar that’s up 3.16% at $1680.50. Gold was up at 2.17% this week
- Spot silver is trading up $1.43 or 7.42% the $20.88. Silver rose 8.64%
- WTI crude oil is trading up $4.44 or 5.04% at $92.61. WTI crude oil rose 5.37%
- Bitcoin love the risk on and is trading at $21,053. That’s up $844 on the day. For the week bitcoin rose 2.23%
Thank you for all your support. Wishing you all a great and healthy weekend.