Wall Street remained steady as investors stay on the sidelines ahead of key labor market data to be released before the regular U.S. trading session in a few minutes (1:30 GMT). Stocks fell yesterday amid growing concerns about further Fed tightening, slowing economic activity, a slower-than-hoped-for recovery in China and worries that U.S. banks could come under heavy pressure due to huge unrealized losses on their balance sheets. The problems at Silvergate Capital and SVB Financial Group highlight the impact of relentless Fed policy tightening on financial sector balance sheets and created nervousness among investors.
Economists expect a sharp slowdown in job growth after January's blockbuster, with expectations for a 225,000 increase in February payrolls. A weaker number could tilt expectations back toward a quarter-point hike, as markets have been increasingly expecting another 50 basis point rate hike lately. I expect the labor market data to show a still very tight labor market, even though February is traditionally a month of rather weak hiring. Pressure will continue on the Fed to continue its fight against high inflation.
Some analysts believe that the pressure on the financial system from rapid rate hikes may be another reason for the Fed to prefer to take it slow. I disagree and do not see the problem of US banks – especially the big ones – as that severe and believe that the Fed will rather focus on taming rising consumer prices, which would also mean that the USD will remain strong and concerns about an upcoming recession and slower economic growth will increase for a longer period of time. More headwinds on stocks and risk markets ahead.
👁 ROB'S MARKET OVERVIEW:
Today's market moves are fully depending on the NFP report. We expect NFP data / unemployment rate / hourly earnings to continue to paint the picture of a very tight US labor market.
March 10 – 2023
🇺🇸 US Markets ↕️/↘️
Cyclical Stocks ↕️/↘️
Tech/Growth Stocks ↕️/↘️
Financial Stocks ↕️/↘️
Defensive Stocks ➡️
Energy Stocks ➡️
All markets will be heavily influenced by NFP-report and the USD. Forex pairs will be dominated by USD strength. Commodities will continue to fall in case NFP data comes in hot due to further concerns of higher rates (for longer) and a stronger USD.
⚒ Commodity Markets ↘️
⚡️Cryptos ↘️ (no recommendation to buy dip)
(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)
Yours, Robert 🇺🇸👩🏼🔧👷🏽♂️👨🏻💼🔍