US Job report highlights strong job market and balanced wage growth
Kudlow says that Us-China talks not linked to US elections
Germany Factory Orders Plunge to worse level since February
Interesting Friday session on NFP day just after the US market closure. The morning kicked off with the release of the Germany Factory orders in June, still showing sign of weakness of the main European Economy with the headline reading at -2.2% vs -0.1% consensus. Not a whole lot of reaction in the single currency as traders were awaiting the release of the NFP in the afternoon. The US job report signalled a strong rebound in the number of jobs added in June (224K vs 160K expected) with wage growth bottoming analyst expectations flattening out at 3.1% YoY. Given the market dovish positioning, with a certain degree of bets stills expecting a 50 bbp cut in July, the latest US Job report overshadows the uber-doves rebalancing expectation for only a 25bbp cut in July. Overall, the hawkish reaction in the market was by the book: dollar strength, rising Yields and Equities lower, basically sell-off across the board.
Global Equities sold off today amid tumbling odds of rate cuts. Tha US job report highlighted a "less than expected dovish reaction" stopping the euphoria of the last weeks exacerbated by improvement in talks between US and China. SP500 came off the 3000 mark settling just above yesterday's low.
On the FX front, USD index extended gains heading now towards the 98 level to the upside. The move comes after the renewed dovish attitude of worldwide Central Bank this week, exacerbated today by a solid US job report. EUR broke back below the 1.1300 level, also previous level from 19th June. The rest of the USD G10 counterparts followed similar pattern, with GBP notably breaching the 1.25 level to the downside.
Crude Oil traded sideways finishing the week in red amid concerns over demand glut and increase of US production capacity. Gold slided back below the 1400 level amid dollar strength and lower odds of a ultra-dovish Fed.
Yield revamped today amid an hawkish interpretation of the recent US numbers. The US 10Y is now back above 2%.
If you missed the morning briefing from the desk click HERE