US Job report confirms strong job market but lagging wage growth
US Manufacturing PMI contracts for 3rd consecutive time
Kudlow says "enormous progress made with China on intellectual property
Today's US job report wraps the end of a busy week of trading, however without major surprises compared to what we already know about the US economy and therefore without major monetary policy implications. The latest NFP report confirms the status of a strong labour market with the addition of 128K jobs to the US economy in the month of October, despite the large GM strike that led to a 36K drop in manufacturing jobs. On the other hand, wage growth continues the recent downtrend highlighting lack of pass-through from labor market to inflation and rising concerns about the "quality" of the US labor market. The choppy market reaction USD related asset is the result of a mixed data release. However, the report points out to a resilient economy and a low-inflation environment, which creates the perfect storm for risky assets. In fact, equities finished the week strong, with major US indices printing fresh intraday all-time highs and safe heavens trading relatively choppy amid positive risk-appetite and worse and than expected ISM Manufacturing PMI (48.3 vs exp 48.9), signing the third consecutive contraction in manufacturing activity.
The market reaction suggests that the FED has been on track for now and that a deterioration in manufacturing data remains something that the market already knows and in line with late cycle. Expectation for a December cut are now given at 12.5% lower than the previous 22.1%
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