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USD: Latest Market News

FOMC Members are seeing Inflationary Risks on Upside, in May

FOMC Members are seeing Inflationary Risks on Upside, in May
  • All participant voted for 50 basis point hike
  • 50 basis point increase is likely appropriate to the next couple of meetings
  • concerned about the risks from higher income commodity prices
  • inflation remained elevated, reflecting continued supply and demand imbalances, higher energy prices, and broader price pressures. Inflation risk being skewed to the upside
  • restrictive stance on monetary policy may well become appropriate
  • Fed should move expeditiously to neutral
  • China lockdowns and Ukraine increased risks. New inflation pressures received from China as well as the Ukraine war, and were likely to weigh on economic activity
  • several thought the potential for unanticipated effects in the financial markets from the run off of the balance sheet
  • many expect tight labor market and wage pressures to continue for some time
  • Members judged that the implications of the war for the U.S. economy were highly uncertain
  • Higher wages and input prices were being passed on to consumers. Of course that will always happen
  • COVID-related lockdowns in China were likely to exacerbate supply chain disruptions
  • although overall economic activity had edged down in the first quarter, household spending and business fixed investment had remained strong
  • Job gains had been robust in recent months, and the unemployment rate had declined substantially.
  • should assess the risk the economy later this year after the rate hikes

You can read all from FED website : May FOMC Meeting 2022

Stocks Are up with 1%, because members of FOMC avoid risks of recessionary environment

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Morgan Stanley recommend SELL EUR/USD to 1.03

Morgan Stanley recommend SELL EUR/USD to 1.03

"We expect EUR/USD to continue softening in the near term, falling to 1.03 by 3Q22 and perhaps even overshooting to parity as concerns about local geopolitics and commodities intensify meaningfully further," MS notes.

However, we expect EUR/USD to begin rebounding modestly in 4Q22and into 2023, with upside driven by reduced fixed income outflows and a weaker USD on the one hand, but limited by continued geopolitical risk premium, relatively tepid growth numbers, and low relative local returns on the other hand. Further optimism on EU integration and an accelerated ECB normalization could bring EUR/USD toward our bull case of 1.14, while sub-expectations growth may keep EUR/USD under 1.10,


TopFxInvest want to take this sell trade from 1.8 because we have a confluence of resistances 0.6 Fibonacci from last swing, Horizontal line of  Resistance also diagonal trendline. Take this trade only with Risk Off sentiment or USD Strength day and manage it according to news Flow.

Alway combine Fundamental Analyses with Technically Analyses

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Economic Growth is slowing all around the globe and inflation will grow with a moderate pace

Economic Growth is slowing all around the globe and inflation will grow with a moderate pace

EU inflation is 6.1% and rate hike is mandatory. From the previously forecasted values of 3%, we have a deviation of 3% which is caused by multiple factors:

  • Russia & Ukraine conflict
  • Energy Price
  • Supply Chains disruption

Goldman Sachs also cut their US economic growth forecasts from 2.6% to 2.4% this weekend.

Slowdown in growth should help lower job openings, it is also likely to raise the unemployment rate a bit.

Blankfein former chief executive of Goldman Sachs and currently senior chairman of Goldman Sachs says "firms should be prepared for a recession this year" and also:

"We're certainly heading - it's certainly a very, very high risk factor. And there's - but, you know, there's a path. It's a narrow path. But I - I think the FED has very powerful tools. It's hard to finally tune them and it's hard to see the effects of them quickly enough to alter it."

https://www.cbsnews.com/news/lloyd-blankfein-face-the-nation-transcript-05-15-2022/

FITCH says that the global recovery is to slow down in 2022 and 2023. Policy interest rates are rising, and FITCH believes that this marks an end to an era of very low borrowing costs for governments.

Remarks from Powel has changed a lot from the last year when he considered that the inflation was transitory and some pain is needed.

“The question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control. The process of getting inflation down to 2% will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels.”

This week, CPI is lowering from 8.3% to 6% (Core CPI). This means that inflation will not decrease, it will slow the pace of growth, and the price of goods are not going to decline. The price of goods will grow with a moderate pace.

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Today CPI is a Hot Reading - Fed Officials Comment's

Today CPI is a Hot Reading - Fed Officials Comment's

Fed Loretta Mester:

 

  • Inflation might be back to around 2.5% in 2023
  • It all depends on inflation's path
  • We need to get mon pol at more neutral stance and then evaluate how much further is needed
  • We might see a couple months of unemployment rate rising but it won't be sustained
  • There's a lot of positive momentum in the economy
  • Unemployment may need to rise, may get another negative GDP print
  • I will need compelling evidence that inflation is moving down
  • We need to consider selling MBS
  • Fed's task is not going to be smooth, unemployment may need to rise to bring inflation down
  • After have point increases in June and July, Fed will have to see what more is needed based on a data in the meantime
  • I don't want to rule anything out on hikes for the second half of the year
  • Challenge for Fed is a large one

 

Fed's Williams

  • If inflation is higher an interest rate that adjusts for higher inflation is needed
  • Resolutely focused on restoring price stability
  • We have a hot labour market
  • Fed task is difficult but not insurmountable
  • Fed actions will cool demand and factors contributing to supply shortages will be resolved
  • Fed needs to be data dependent, adjust policy actions as circumstances warrant
  • As long as demand is very strong, it's difficult to resolve supply chain issues
  • You can imagine circumstances where we don't need to go much above neutral but that will be decided, we will learn on the way

 

Fed's Barkin:

  • Fed's path will not necessarily cause a recession
  • Fed needs to get inflation under control
  • Inflation is high, persistent and broad based
  • Getting inflation close to Fed's goal creates certainty that enables growth and supports maximum employment
  • Demand is strong and looks to remain robust
  • A number of pandemic-era inflation pressures will eventually settle
  • Rising borrowing rates will dampen investment levels and spending on interest-rate sensitive items like housing and cars

 

Fed's Waller:

  • We are trying to get the jobs market back to equilibrium, right now it's out of whack
  • If we get some help from supply chain resolution, that's fantastic, but won't count on it
  • Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy
  • Inflation is too high, my job is to get it down
  • This is the time to hit with rate increases, because the economy can take it

Today CPI will be a hot reading, but FED policies are changed according to data from the Economy. If will have next month's some issues with supply chains solved then it's possible to see some positive's Risk Tones in Markets  

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FOMC Lift rates with only 0.50 % as expected

FOMC Lift rates with only 0.50 % as expected

FOMC Lift rates with only 0.50 % as expected

 

0.5% increased rates were taken by Markets with lots of optimism because Powell announced 75 BP hikes off the table for next two meetings. Sentiment was RISK-ON, instead of rate increases because trader's already priced in 0.5%.

Market Evolution NY Closed: 

  • S&P 500 up 122 points to 4298, or 2.9%
  • Nasdaq +3.1%
  • DJIA +2.8%
  • DXY 0.15%
  • VIX -13%  

 

Taking out of the table 75 BP hike, for next two meetings, Powel will sustain a new bounce into risk assets but I think it's short-term (1-2 weeks) until it will have new inputs from economies. Anyways, FOMC meeting, it's a fundamental shift for Risk instruments.

In the currency markets we see movement according to the risk sentiment: AUD & NZD UP and JPY & CHF down.

 

Some important remarks from Powell press conference regarding economic statement:

 

  • Inflation is much too high
  • It's essential we bring inflation down to keep a strong labor market
  • Price pressures have spread to a broader range of goods and services
  • Wages are rising at the fastest pace in many years
  • The labor market is 'extremely' tight
  • There is a broad consensus that 50 bps hikes should be on the table at the next couple meetings
  • We are prepared to adjust any of the details or our approach
  • Lockdowns in China are likely to further snarl supply chains

 

You can read all here 

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Tomorrow FOMC Expectations from Commercial Banks & former FED official's

Tomorrow  FOMC Expectations from Commercial Banks & former FED official's

BoA (Bank of America) 
Perhaps the most interesting moment at the press conference will be his response to a question about whether a 75bp hike is on the table.

 

Barclay's 

"At this week's May FOMC meeting,we expect the Fed to lift the target range for the federal funds rate by 50bp to 0.75%-1.00%.May's hike has already been signaled to markets,with FOMC participants becoming increasingly receptive to front-loaded rate hikes amid resilient data on activity and intensified cost-push price pressures since the March meeting ... Given the broad parameters for balance sheet normalization laid out in the March meeting minutes,we expect the monthly run-off caps to ramp up from$35bn in June($20bn for treasuries,$15bn for agency MBS),to$65bn in July ($40bn/$25bn)and then to the maximum pace of$95bn/month from August.

 In the press conference,we expect much of the discussion to revolve around the speed at which the committee is prepared to lift its policy rate to neutral,with markets now pricing in 50 bp hikes in every meeting through September.We continue to expect 50 bp hikes in May and June,with the committee slowing the pace to 25bp per meeting from July onward as it sees signs of slowing inflation,"

 

Morgan Stanley  see rate hike by 50bp and SPX down to  3800 near term and 3400 long term

 

Former FED according to Wallstreet Journal "Rates May Need to Rise Quite a Bit to Get to Neutral" , he see rates to 5% 

Read entire article on Wall Street Journal

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US Q1 advance GDP Terrible values -1.4% vs +1.1% expected

US Q1 advance GDP  Terrible  values -1.4% vs +1.1% expected

Yesterday, Advanced GDP was published and we saw horrible  values with -2.4% deviation from expected values. All branches of the GDB were in red.   

  • Q4 final was 6.9% annualized
  • Consumer spending +2.7% vs +2.5% prior
  • Consumer spending on durables -4.1% vs +2.5% in Q4
  • GDP deflator +8.0% vs +7.3% expected
  • Core PCE +5.2% vs +5.4% expected
  • GDP final sales -0.6% vs +1.5% in Q4
  • Nominal GDP vs up 14.3% annualized in Q4
  • Business investment +9.2% vs +2.9% in Q4
  • Home investment +2.1% vs +2.2% in Q4
  • GDP ex motor vehicles -1.3%

The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, while imports, which are a subtraction in the calculation of GDP, increased. Personal consumption expenditures (PCE), nonresidential fixed investment, and residential fixed investment increased.

The Real problem for the US Economy it's not that GDP is an inflation of 8%.

Economic growth returned in the years after the 2008 recession. The US entered an era of low growth but well below previous recovery phases. That sluggish economy is why the Fed kept rates low and launched QE (quantitative Ease).Fed officials talked of letting the economy “run hot,” and tolerate a period of high inflation in order to restore long-term averages.

Covid 19 and Ukraine-Russia war is threatening to change this high inflation with hiper-inflation (over 10%).That suggests recession might be coming anyway in 2022-2023, even if the Fed weren’t tightening policy.

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Fed's Brainard: Inflation is much too high & subject to upside risks but will move down by year end

Fed's Brainard: Inflation is much too high & subject to upside risks but will move down by year end
  •  I am carefully monitoring rotation from demand for goods back to services and whether that occurs without sparking inflation
  •  Expects balance sheet to shrink significantly faster than the last cycle
  •  Most low wage workers have seen wage growth that exceeds avg inflation
  •  War and covid lockdowns in China likely to extend supply chain bottlenecks and hurt growth
  •  After policy is more neutral, extent of additional tightening depends on the evolving outlook
  •  Fed will tighten 'methodically' through a series of rate hikes

Another Fed Speaks Fed's Daly: We'll be able to get inflation moving down by year-end

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FED Rate Hike by 25 Basis Points on Yesterday

FED Rate Hike by 25 Basis Points on Yesterday

The rate hike was priced in and the market was on RISK-ON mode yesterday. Main question for the FED yesterday was, what percent will be the hike?  

To stop inflation 0.5% was a better idea to hike but voters don't want to risk a recession with actual conflict between Ukraine-Russia. The surprise is 7 hikes in the dot plot instead of 5 hikes. The 10 years yield is now lower versus pre-rate decision level. Regarding the war in Ukraine, Powell said “The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity. The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity.”

Regarding the US Economy, we have below stances: “Indicators of economic activity and employment have continued to strengthen. Job gains have been strong in recent months, and the unemployment rate has declined substantially. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.” You can read full press release here:


Surveying the FOMC's 18 members, the dot-plot showed that 12 FED officials predicted at least seven total rate hikes in 2022. On the high end, one FED official expects the central bank to raise rates above 3% during the year, from the level around 0.25% currently in force.

Please check below the dot plot below:

fed dot plot 15 March 12 of 18 saw 0.9% in 2022, 11 of 18 saw 1,9% into 2023 annual median at 1.6%. Median interest rates for 2024 is 2.1%

Macroeconomic implications:

Energy Financials Sectors will outperform, we consider that it's a good time to buy bank's stocks and sell High growth stocks like tech. Instead of a short term rebound for Nasdaq's & S&P500, we see down in the long run. I can't see inflation slowing down in the long term and 0.25 it's not enough to calm but the FED was forced by the actual Geopolitical climate.

Euro will be much weaker in the long run than the dollar. Unfortunately for the EU, in the Eurozone there are plenty of headwind that affect growth: price of energy, war between Ukraine & Russia.

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The Russia-Ukraine War will Dominate Markets this Week

The Russia-Ukraine War will Dominate Markets this Week

After high Inflation in US and Europe, the Covid-19 pandemic outbreak, a new event like war between two major countries affected the markets. War between Ukraine and Russia pushed this morning Gold over 2000$, Oil to 124$, Soybeans 1686$ and Corn to 775$. During war times precious metals, Oil and Grains perform well instead of risk assets like stocks.

Gold pop UP!US OIL POP UP

High level of sanctions from the Western Economies will destroy the Russian economy in the medium term. The Putin regime will fall in the near future because you can't win a war completely isolated from western world and you can't govern with terror and mass-media censorship.

According to the last Russian laws, you can get 15 years in jail if you transmit information from the battlefield that is not what the regime wants. All social media are closed, also internet websites like BBC, CNN, The Guardian etc. If the Putin regime it's not quickly removed, the Russian people will live like in the North Korea.

Also, some important brands like Toyota, Ford, BMW, Mercedes, VW, Oracle, SAP, Mazda, Nike, PayPal, Apple, IBM, DELL, Mitsubishi have closed the doors to the Putin regime. The Russian currency is moving down by over 30%, and the Moscow stock market is closed for three days in a row.

With the US & EU already facing the highest inflation in over four decades, triggered by the Covid lockdowns and restrictions, and the February CPI release this week anticipated to show an escalation during the previous month, the real possibility of an economic recession is even larger.

Therefore, the Federal Reserve's upcoming policy meeting on Mar. 15-16, will start a new interest rate hike cycle and it's not advisable to be exposed on the growth stocks. We still own high dividend stocks in the energy and finance sectors and also, we are keeping our Gold & Silver positions. We anticipate further weaknesses in stocks this month.

The United States and European allies are exploring banning imports of Russian oil, Blinken said on Sunday, and the White House coordinated with key Congressional committees moving forward with their own ban.

"A boycott would put enormous pressure on oil and gas supply that has already felt the impact of increasing demand. Prices are likely to rise in the short term, with a move toward $150 a barrel not out of the question Such a move will put further pressure on global economies, pushing inflation higher, leaving central banks debating how quickly rate hikes should be implemented." according to some analysts from CMC Markets.

"The war has clearly increased the risk of a stagflation scenario for the euro zone, where you will have a stagnating economy and much higher inflation on the back of high energy prices," said Carsten Brzeski, global head of macro at ING.

We stand with the Ukrainian people that fight for their freedom and we want to help mothers with children that are refugees. Right now, we are facing a real drama on the Ukrainian border as the refugee and their children are staying over three nights on -15°C without food and water.

It's estimated that there will be over 10 million refugees this year, if the conflict does not stop soon. 

ukrainian refugees

If you want to help refugees, you can donate on these links:

https://www.unicef.org.uk/donate/donate-now-to-protect-children-in-ukraine/ 

https://donation.dec.org.uk/ukraine-humanitarian-appeal

https://donate.unrefugees.org.uk/ukraine-emergency/~my-donation

https://donate.redcross.org.uk/appeal/ukraine-crisis-appeal

https://www.icrc.org/en/where-we-work/europe-central-asia/ukraine

https://www.savethechildren.org.uk/

https://donate.careinternational.org.uk/page/100263/donate/1?ea.tracking.id=e75_orgsocial

https://www.peopleinneed.net/

https://msf.org.uk/

https://donate.unhcr.org/int/en/ukraine-emergency

You can help Ukraine Army here:

https://savelife.in.ua/donate/        

https://www.portmone.com.ua/r3/uk/terminal/index/index/id/118103/

Слава Україні! (Slava Ukraini!)

Glory to Ukraine!

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Risk-off tone will persist in February: ADP & EU Inflation in focus

Risk-off tone will persist in February: ADP & EU Inflation in focus

 The ADP job data surprised to the downside this month: - 301K versus +200K estimate.

All economic branches were down this month:

  • Goods -27K
  • Manufacturing -21K
  • Services -274K
  • Transportation and Utilities -62K
  • Leisure and Hospitality -154K
  • Construction -10 K (Also Canadian Building Permit felt -0.3 over estimate)
  • Education & Health Services -15 K
  • Small firms -144K decline
  • Medium firms -59K decline
  • Large firms -98K decline

The fell was the largest since April 2020 because Omicron outbreak, according to FED officials.

BOE has increased official bank rate by 0.25 points to 0.5%, today.

Eurozone inflation hits new record 5,1% CPI versus 4,4% expected (Highest since 30 years), that will put more pressure on ECB today.

Bidden sent 3k US Soldiers to Romania Poland and Bulgaria.

IMF Chief Georgieva: Geopolitical tensions make uncertain outlook for global economy.

Regarding our portfolio, we shrink our exposure to growth stocks and closed some losing positions on companies that have large debts or lower growth expectation (ASAN, BILL, W, NVCR, RDFN), and further, we closed two days ago our grains exposure with 20% percent profits in three months. We expect to 💪 our dividend stock's exposure's and add to precious metal positions if we see another 2k points decrease in Gold and Silver after FED rate increases. We think market will retest soon, lower point from January and US Dollar 💵 will stay in upper zone. US dollar speculative positioning and bullish sentiment are surging. SP500 Retest Of January Lows  is about to begin.

You can check real-time  our risk-on/off tone indicator .

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Bank of America see another USD rally

Bank of America  see another USD rally

Bank of America Research announce  another rally for USD after today FOMC policy meeting 

"The Fed will announce the last round of asset purchases at the Jan FOMC meeting, and we see risk for a further hawkish pivot...Chair Powell is likely to signal the first hike at the March meeting and note that every meeting is live,"

"In our view, a hawkish FOMC this week should serve as a key catalyst for another leg of US dollar appreciation against lower beta FX . Our forecasts for EUR/USD and USD/JPY this year remain 1.10 and 118, respectively, and we see the risks of attaining that sooner" BofA adds.

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Optimism didn't last on Markets after China lower Rates

Optimism didn't last on Markets after China lower Rates

SPX gave back the gains at the end of the day, because investors lost conviction that an early rally had legs. Risk-On sentiment didn't last after China decreased rates. Fears of inflation and higher interest rates in accordance with Geo-Political conflict between Ukraine & Russia have sent markets in red at end of the session.

Concern that the Federal Reserve will aggressively move to raise rates this year is a much more powerful catalyst than Chinese bank intervention and stocks Earnings. Investors have been concerned about rising rates because they raise borrowing costs and could dent global growth prospects and douse the earnings outlook for companies.

Analysts at ING said geopolitical risks, notably the possibility of Russia invading Ukraine, could continue to add to pressure on rising rates concerns.

Gold & Silver touched new highs lifted by worries surrounding inflation and Russia-Ukraine tensions. Gold 1,842 & Silver 24.63 gains were unexpected in the short term when bonds are up and Interest rates are expected to grow but geopolitical context is also an important catalyst.

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Growth forecast are downgraded in Australia & United States

Growth forecast are downgraded in Australia & United States
  • Goldman Sachs change their growth forecast for US  from  5%-6% in 2021 to 3,4% in 2022 because of two factors:
    spread of Omicron Variant 
  • diminishing expectations for fiscal stimulus

Deloitte projects 4% GDP instead of Reserve Bank of Australia 5,5% 

Deloitte Access Economics says the Omicron variant manes the RBA forecast is too optimistic because omicron is Spreading at a rapid rate and half the workforce would likely miss an extra week of work in H1 of 2022.

But with optimism Deloitte inform us that Omicron would not cause the same economic problems as the first two waves.

Will economy drop into 2022 what is your opinion?! 

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Highest CPI from 1982 - US CPI 7% but no help for $

Prior was 6.2%

m/m CPI +0.5% vs +0.4% expected

Prior m/m reading was +0.8%

Real weekly earnings +0.1% vs -0.2% prior (prior revised to -0.4%)

Full report

Core inflation:

Ex food and energy +5.5% vs +5.4% y/y expected

Prior ex food and energy +4.9%

Core m/m +0.6% vs +0.5% exp

Prior core m/m +0.5%

Some notable categories:

New vehicles +1.0% m/m

Used cars and trucks +3.5% m/m (and +37.3% y/y)

Apparel +1.7%

Shelter +0.4%

Gasoline -0.5%

Food +0.5%

Gold is UP 

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Goldman Sachs see broad weakness on USD

Goldman Sachs see broad weakness on USD

Our market forecasts through the balance of the year assume that US Treasury yields will rise but that the US Dollar will depreciate against most crosses.

The Dollar's correlation with Treasury yields tends to vary over time, and depends on the underlying macroeconomic fundamentals driving rates and FX markets

In a period of rising cyclical optimism, as we expect over the near term, we should anticipate a negative correlation, with rising rates associated with broad Dollar weakness

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Fed's Bullard says Fed should proceed with tapering

Fed's Bullard says Fed should proceed with tapering

Fed's Bullard (2022 voter) says Fed should proceed with tapering despite the weak US jobs data, while he dismissed concerns the rebound in the labour market was faltering and said there is plenty of demand for workers. USD strength after comments

  • Note Bullard is the first Fed official to speak following Friday's NFPs.
  • Headline nonfarm payrolls disappointed expectations in August, printing 235k (exp. 750k); the unemployment rate fell by 0.2ppts, in line with the consensus, to 5.2%. Other measures of slack improved in the month, with the U6 rate of underemployment falling to 8.8% from 9.2%, the employment-population ratio, which is a metric that is closely watched Fed officials, rose to 58.5% from 58.4% (vs pre-pandemic 61.1%), although the participation rate, which the Fed also factors into its deliberations, was unchanged at 61.7%. The wages data saw average hourly earnings rising +0.6% M/M (exp. +0.3%), lifting the annual rate to 4.3% (from 4.1%); average workweek hours declined a little to 34.7hrs from 34.8hrs. Analysts noted that the lower than consensus headline was hinted at by several proxies, including the Homebase Survey, the ISM survey data (only manufacturing was available ahead of the NFP report), as well as the Conference Board's gauge of consumer confidence, which all gave the impression that Delta fears were contributing to labour market tightness. Ahead, Pantheon Macroeconomics is expecting further weakness in the September data too, and is also flagging concerns over the prospects of an October revival, given that labour market behaviour lags cases, and PM says cases are yet to peak. "Before Delta, we were looking for 1M-plus payroll gains in the fall, but that’s now going to be a real struggle, suggesting that Chair Powell will be in no hurry to be pushed into tapering while the labor market picture so uncertain," Pantheon writes, "we think the announcement comes in December, but the FOMC could easily be forced to wait until January." Meanwhile, many have been looking for evidence that the inflation upside in recent months was more persistent than the Fed was acknowledging, and were looking for this evidence within the wages metrics (the idea is that Americans would begin to demand higher compensation amid rising price pressures, which could feed into a loop of inflation becoming more persistent). While this month's data may allude to that theme, Pantheon warns that while the +0.6% M/M jump is startling, "it overstates the trend because the data are not mix-adjusted, so a month with no net job gains in the low-paid leisure and hospitality sector will see a bigger increase in AHE than a month with more even payroll growth." Even so, the consultancy notes that wage gains have averaged +5.8% Y/Y in the three-months to August vs the previous three months, and while it is high, PM argues that "this ignores the idea the faster productivity growth potentially raises the Fed’s tolerance for faster wage growth; ultimately, what matters is unit labour costs, which remain contained."

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Non farm Payroll (NFP) BIG MISS -> US EQUITY OPEN DOWN IN RED

The NFP US jobs report covering August was down too much below expectation. Most Affected domain was retail and leisure/hospitalitysectors.COVID fear is again keeping people home but also another cause is laborsupply issue because wages are up.·  Payrolls grew just 235,000 in August &unemployment rate fell to 5.2%.·  The leisure/hospitality sector had no net jobincrease and retail employment fell, yet businesses in those segments are stilltrying to hire.  ·  Similarly, construction lost jobs because ofmaterials shortages and increased price in transports ·  Strong wage growth and rising participation are notrelevant since labor demand is lower.·  The labor force participation rate was unchangedat 61.7DollarINDEX is DOWN, Stocks down and, Gold Up

Stocks open subdued across the board as August failed to follow up from July’s solid NFP report – note a recent uptick in the NDX. The below forecast range 250k US jobs added in August has hit risk sentiment, seeing stock futures reverse earlier strength (particularly Russell 2k), with a pause in jobs added in the Hospitality and Leisure sector suggestive of some Delta-induced reopening roadblocks, although one could argue that is “transitory”   Stock Markets are all time high this week ignoring the danger of Tapering this Year.  Monday markets are closed and we expect reactions on Tuesday  

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