Strong U.S. jobs date likely to keep Fed in hiking mode

📰 Analysts expected a slowdown in hiring (we expected a strong report) and got a big surprise as hiring in July was much stronger in the U.S. than expectations and thus defies signs that the economic recovery is losing steam.

Nonfarm payrolls rose 528,000 for the month. The unemployment rate remains at a very low level and fell further to 3.5%. Analysts expected only about 250,000 new hirings and unemployment rate to stay at 3.6%.

The good labor market data suggest that the U.S. economy remains strong and can withstand higher interest rates. Expectations for further rate hikes will now rise. Wage growth also jumped, as average earnings rose 0.5% on the month and 5.2% on the year. Wages continue to drive up inflation, which is already at its highest level since the early 1980s. Increased inflationary pressure on the USD will support the USD due to expectations of a tighter Fed and weigh on Wall Street in the short term for the same reason. 

Very strong earning reports and relatively thin trading supported the stock market rally this week. Expectation of a tighter Fed weighs now on the ongoing rally and will likely result in Wall Street closing Friday lower – with also typical profit taking at the end of a positive week. 

US-China tension also remain in focus and add to the uncertainties clouding the outlook. China announced it would halt cooperation with the US in a number of areas including working-level talks on climate change and defense.

Ongoing recession concerns and the now stronger USD will weigh on commodity prices and risker perceived assets and currencies (such as the GBP, EUR, AUD, cyclical / tech stocks). Financial stocks / banks can benefit from higher US treasury yields. I expect oil to remain bearish, while gold saw a dip now due to the stronger USD and higher US Treasury yields – but will likely rebound next week.


🇺🇸 US Markets ↘️
Cyclical Stocks ↘️
Tech/Growth Stocks ↕️/↘️
Financial stocks ➡️/↗️
Energy ↘️

💱 Forex Markets
USD ↗️
CAD ➡️
JPY , CHF ➡️/↘️

⚒ Commodity Markets ↘️
Oil prices ➡️/↘️
Natural Gas prices ↘️
Metal prices ↘️
Precious Metals ➡️/↘️

⚡️Crypto Market ➡️/↘️

(*↗️ bullish, ↘️ bearish, ➡️ sideways / stable, ↕️ mixed / volatile)

Yours, Robert 🇺🇸🤝👩🏼‍🔧🧑🏽‍🏭🔍