Spreadex Market Update
Blockbuster US non-farm payrolls puts September rate hike back on the table
Coming in at a robust 255k June’s non-farm unemployment change number did slip from May’s upwards revised 292k; however, it still far outperformed the 180k expected, putting the jobs sector on far stronger footing than in was between March and April. The headline figure wasn’t the only positive; while the unemployment rate remained unchanged at 4.9% anything under 5% is impressive. Even better was the wage growth number, which unexpectedly jumped to 0.3% against the 0.2% forecast (and the 0.1% the month previous).
If the US can manage similar figures for August then the US may well be on its way to a rate hike come September 21st, the date of the next Federal Reserve meeting. The markets, at least, took it as such, with the dollar surging against a basket of currencies, taking 0.6% off the pound, 0.7% off the euro and 0.8% off the Japanese yen. Yet the most interesting reaction came from the Dow Jones; despite the greenback’s strength, and the potential for soon-to-be raised rates, the index rose by nearly 150 points, just about putting it back above 18500. It seems that currently investors are a bigger fan of ostensible Fed clarity than they are of avoiding an increase in interest rates.
The news was just as welcome over in Europe, which had been beginning to flag around lunchtime. The DAX and CAC led the way, rising by 1.3% and 1.7% to recover most of the week’s losses. The FTSE, meanwhile, jumped by just shy of 1%, allowing the UK index to just about dip its toe across 6800 for the first time since in around a year.
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