Nonfarm payrolls: US adds 943,000 new jobs in July

The US economy added 943,000 new jobs in July according to today’s nonfarm payrolls print.

A strong month for US jobs

The unemployment rate fell to 5.4% according to the US Bureau of Statistics as hiring rose at its highest rate for nearly a year last month. The payroll increase was also the largest since August 2020.

New jobs have been added to the economy for six consecutive months.

Estimates had varied wildly this morning before this afternoon’s report was published. Some more pessimistic economists had predicted 350,000 new jobs. Some put the figure closer to 1.2m. However, the Dow Jones estimate came to 845,000. Given this is pretty much the gold standard for NFP number forecasting, we can consider today’s report a big success.

This is doubly true given the market was expecting labour shortages, caused by businesses’ perceived hiring difficulties and rising Delta variant cases.

Average hourly wages increased 0.4% on a monthly basis, beating forecasts. Wages are now 4% higher than they were a year ago.

“The data for recent months suggest that the rising demand for labour associated with the recovery from the pandemic may have put upward pressure on wages,” the BLS said in the report. It was also quick to point out that Covid is still skewering the data.

Overall, job participation stands at 61.7% – the highest level since March 2020. Are things getting back on track for the US? This report certainly suggests that the case.

However, let’s be realistic. The Delta variant is running rampant in the US, where infections are up to 100,000 per day. While these stats are all very encouraging, the pandemic is by no means over.

How did the markets react to today’s NFP print?

The Dow Jones rose 155 points, equating to 0.4%, reaching an intraday record high. Likewise, the S&P 500 rose 0.2% for its own intraday all-time high. The Nasdaq, due to its tech-heavy nature, did not fare so well, dropping 0.2%.

According to CNBC, bank stocks powered today’s gains. Wall Street big names like JPMorgan, Bank of America, and Wells Fargo all recorded 1% gains at market open. Gains were also seen in energy, retailer, and industrial stocks.

On the flip side, tech stocks fell. Observers suggested this may be from investors taking money out of these and push them into growth stocks. Amazon, Apple, and Salesforce were trading slightly down.

The dollar continued to rally on today’s strong NFP report. The dollar index had climbed 0.56% to reach 92.81.

Subsequently, GBP/USD and EUR/USD pulled back on the stronger dollar. At the time of writing, GBP/USD was floating around the 1.387 level, after starting the day pushing over 1.390. EUR/USD was down about 0.67% at the 1.176 mark.

الأسبوع المقبل: الرواتب غير الزراعية بالإضافة إلى قرارات الفائدة لبنك إنجلترا وبنك الاحتياطي الأسترالي

تأتي بيانات الرواتب غير الزراعية في يوم الجمعة هذا. لقد شهدنا ارتفاع الاقتصاد الأمريكي وعودته إلى الحياة في مارس، لذا سنرى ما إذا كان الزخم الرئيسي مستمرًا.

قرارات الفائدة في طريقها هي أيضًا من بنك إنجلترا وبنك الاحتياطي الأسترالي، لكن كما هو الحال هذا العام، لا نتوقع تغيرات كبرى في الاتجاه. ما زلنا في موسم الأرباح.

تصدر مئات الشركات ذات رؤوس الأموال الضخمة تقاريرها حول ربع كان وفيرًا بالنسبة للبعض.

الرواتب غير الزراعية الأمريكية – هل يماثل أبريل أرقام مارس الضخمة؟

تصدر الرواتب غير الزراعية لشهر أبريل يوم الجمعة. ستتجه الأعين إلى سوق الوظائف الأمريكي بعد أن تجاوزت بيانات مارس التوقعات، لتسجل عودة الاقتصاد الأمريكي المزدهر إلى الحياة.

ارتفعت الرواتب غير الزراعية إلى 916،000 في مارس – لتحطم تقدير Dow Jones البالغ 675،000. شهد قطاع الترفيه والضيافة أكبر المكاسب، حيث أضاف 280،000 توظيف شهري جديد.

وبنى التشييد على نجاح الشهر الماضي بإضافة 110،000 راتب هذا الشهر. شهد التعليم ازدهارًا مع إعادة فتح الولايات المتحدة المدارس. حيث وظفت المؤسسات التعليمية المحلية والحكومية والخاصة معًا 190،000 موظف إضافي في هذا الشهر.

وفرة في إشارات النمو الاقتصادي. يقترب النشاط الاقتصادي من مستويات ما قبل الجائحة، حيث بلغ 93.4% في متابع النشاط الاقتصادي الأمريكي Jefferies JeffData. تطلعات نمو الناتج المحلي الإجمالي مرتفعة أيضًا.

أيضًا بيانات مؤشر مديري المشتريات التصنيعي من ISM على أهبة الاستعداد هذا الأسبوع، لتضيف لخليط المؤشرات الاقتصادية الداخلية، بعد أداء ممتاز في مارس. جاء المؤشر بنسبة 64.7% في الشهر الماضي، مظهرًا ارتفاعًا كبيرًا في نشاط التصنيع مقارنة بالعام الماضي.

يلقي هذا بعبء الحفاظ على الزخم في هذا الجوانب الاقتصادية الحيوية.

لا تغيير في سياسة بنك إنجلترا هذا الشهر

لا تتوقع أي تغيير في السياسة النقدية في اجتماع بنك إنجلترا المزمع عقده يوم 6 مايو، ومع هذا فإن التطلعات الاقتصادية الأكثر إشراقًا تشير بالتأكيد إلى قدرة البنك على تخفيف وضع الطوارئ في وقت أبكر.

مع سريان التيسير الكمي بمعدل يزيد قليلًا عن 4 مليار جنيه استرليني في مشتريات سندات مالية حكومية بريطانية مضمونة القيمة أسبوعيًا، سيكون التركيز على النقطة التي تختار لجنة السياسة النقدية عندها أن تشير إلى أنها ستُبطئ هذا الأمر في وقت لاحق من هذا العام.

لم يكن انكماش الناتج المحلي الإجمالي في الربع الأول بنفس السوء الذي كنا نخشاه، حيث أظهر الاقتصاد مرونة أكبر للغلق الثالث عما أطهره للغلق الأول، بينما يصبح نجاح التطعيم واضح للغاية ويعني أن رفع كل القيود قبل 21 يونيو يبدو محتملًا أكثر وأكثر.

لذا، فإن هناك خطر من أن يعلن البنك خططًا لتدريج شراء الأصول في هذا الاجتماع، قبل الموعد الذي ربما يتوقعه السوق. سيكون هذا أمرًا إيجابيًا على الأرجح للجنيه الاسترليني، حيث أن أسواق الفوركس تواصل بخس قيمة تشدد لجنة السياسة النقدية.

يتوقع البنك انخفاض بنسبة 4% في الربع الأول (ربع مقابل ربع)، إلا أن البيانات تشير حتى الآن إلى أن الانكماش كان أهدأ من توقع فبراير. قد تُنقح تقديرات النمو للعام بأكمله بصورة كبيرة، لترتفع عن النسبة الحالية البالغة 5%. قد يوفر هذا ذخيرة لتدريج أبكر، إلا أن لجنة السياسة النقدية قد تفضل الانتظار لوقت أطول (إلى يونيو مثلًا، حين يكون مدى إعادة الفتح مقدر بصورة أفضل) حتى تخطط لتدريج أكثر حدة في النصف الثاني من العام.

لا تغيير في معدل فائدة النقد لبنك الاحتياطي الأسترالي لكن تمديد التسهيل الكمي ممكن

كما هو الحال مع بنك إنجلترا، ليس متوقعًا من بنك أستراليا أن يجري أي تغييرات كبرى في السياسة عندما يدلي فيليب لوي وشركاه ببيان معدل فائدة الشهر هذا الأسبوع.

قال محافظ بنك الاحتياطي الأسترالي «إن المجلس لن يرفع معدل فائدة النقد حتى يكون التضخم الفعلي بين 2% و3% بصورة مستدامة. وحتى يحدث هذا، يتعين على نمو الرواتب أن يرتفع بصورة ملحوظة عما هو عليه الآن». قال هذا فيليب لوي في بيان مارس. يبقى المعدل عند 0.10% في المدى المنظور.

المكاسب الكبيرة في التوظيف وسوق العمل الأكثر إحكامًا هي العوامل التي ستجبر لوي. في الوقت الراهن، لا يتوقع بنك الاحتياطي الأسترالي عودتهم حتى 2024 على أقل تقدير.

بدلًا من هذا، قد نرى تمديدًا لبرنامج التيسير الكمي الأسترالي. يعتقد محللو Westpac أن هناك شراء سندات ثالث بقيمة 100 مليار دولار في الطريق، في حركة مصممة «لتكميل قرار تمديد سياسة السيطرة على منحنى العائد لشراء سندات نوفمبر 2024 بمعدل فائدة نقد يبلغ 0.1%».

بوجه عام، فإن مزاج بنك الاحتياطي الأسترالي جيد.

في بيان البنك المركزي لشهر مارس قال البنك: «إن التعافي الاقتصادي في أستراليا ماض قدمًا، وهو أقوى مما كان متوقعًا. هبط معدل البطالة إلى 5.8% في فبراير وقد عاد عدد الأشخاص العاملين إلى مستوى ما قبل الجائحة».

«ارتفع الناتج المحلي الإجمالي بنسبة قوية بلغت 3.1% في الربع المنتهي في ديسمبر، حيث تعزز بدفعة أخرى لاستهلاك الأسر المعيشية مع تحسن الوضع الصحي. من المتوقع استمرار التعافي، بنمو أعلى من التوجه في هذا العام والعام التالي. الميزانيات العمومية للأسر المعيشية والأعمال في حالة جيدة، وينبغي أن تواصل دعم الإنفاق».

وابل الأرباح يستمر في وول ستريت

تتأهب الشركات ذات رؤوس الأموال الضخمة لعاصفة أخرى من أرباح وول ستريت هذا الأسبوع.

حتى الآن، يبدو أن هذا الربع كان أفضل أداءً للشركات التي تصدر تقاريرها بوجه عام. أصدرت الشركات أرباحًا مجمعة بلغت 23.6% فوق التوقعات حتى الآن، بحسب تقرير أرباح FactSet المتعمق المؤرخ 23 أبريل.

نشرت كبرى الشركات مثل Apple وAlphabet أرباح فصلية قوية، بالرغم من أن بعض كبرى شركات التكنولوجيا مثل Spotify وNetflix قد شهدت هبوط أداء مقاييس المشتركين والمستخدمين الرئيسية.

إلا أننا عندما نتطلع إلى هذا الأسبوع، نجد أن تشكيلة من الشركات ذات رؤوس الأموال الكبيرة تصدر تقاريرها. فشركات التكنولوجيا PayPal وSquare في مقدمة الصف، وكذلك رائدة لقاح كوفيد 19 Pfizer. لقد كان لتعميم لقاحها دور فعال في مساعدة الاقتصادات على العودة إلى الوضع الطبيعي، لذا سننظر على الأرجح إلى ربع ناجح لشركة الأدوية.

انظر أدناه من أجل موجز للشركات ذات رؤوس الأموال الكبيرة التي تصدر تقارير أرباحها في الأسبوع القادم.

أهم البيانات الاقتصادية لهذا الأسبوع

Date  Time (GMT+1)  Currency  Event 
Mon 03-May  3.00pm  USD  ISM Manufacturing PMI 
       
Tue 04-May  5.30am  AUD  Cash Rate 
  5.30am  AUD  RBA Rate Statement 
  Tentative  AUD  Annual Budget Release 
  11.45pm  NZD  Employment Change q/q 
  11.45pm  NZD  Unemployment Rate 
       
Wed 05-May  10.00am  EUR  EU Economic Forecasts 
  3.00pm  USD  ISM Services PMI 
  3.30pm  USD  US Crude Oil Inventories 
       
Thu 06-May  12.00pm  GBP  BOE Monetary Policy Report 
  12.00pm  GBP  MPC Official Bank Rate Votes 
  12.00pm  GBP  Monetary Policy Statement 
  12.00pm  GBP  Official Bank Rate 
  3.30pm  USD  US Natural Gas Inventories 
       
Fri 07-May  1.30pm  CAD  Employment Change 
  1.30pm  CAD  Unemployment Rate 
  1.30pm  USD  Average Hourly Earnings m/m 
  1.30pm  USD  Nonfarm Employment Change 
  1.30pm  USD  Unemployment Change 

أهم تقارير الأرباح لهذا الأسبوع

Date  Time (GMT+1)  Currency  Event 
Mon 03-May  3.00pm  USD  ISM Manufacturing PMI 
       
Tue 04-May  5.30am  AUD  Cash Rate 
  5.30am  AUD  RBA Rate Statement 
  Tentative  AUD  Annual Budget Release 
  11.45pm  NZD  Employment Change q/q 
  11.45pm  NZD  Unemployment Rate 
       
Wed 05-May  10.00am  EUR  EU Economic Forecasts 
  3.00pm  USD  ISM Services PMI 
  3.30pm  USD  US Crude Oil Inventories 
       
Thu 06-May  12.00pm  GBP  BOE Monetary Policy Report 
  12.00pm  GBP  MPC Official Bank Rate Votes 
  12.00pm  GBP  Monetary Policy Statement 
  12.00pm  GBP  Official Bank Rate 
  3.30pm  USD  US Natural Gas Inventories 
       
Fri 07-May  1.30pm  CAD  Employment Change 
  1.30pm  CAD  Unemployment Rate 
  1.30pm  USD  Average Hourly Earnings m/m 
  1.30pm  USD  Nonfarm Employment Change 
  1.30pm  USD  Unemployment Change 

Stocks come off highs but optimism reigns, OPEC agrees cut

German and Chinese data is taking the gloss a little off Friday’s US jobs report, but the overriding sense in stock markets remains one of remarkable optimism. Speaking of which, pubs in England could reopen by Jun 22nd.

Stock markets surged last week and completed Friday by breaking through more important levels after a very strong jobs report from the US. The nonfarm payrolls report showed the US economy added 2.5m jobs in May, after more than 20m were lost the previous.

This was taken as a reason to buy stocks as it handsomely beat forecasts of 8m jobs being lost. The S&P 500 is now down just 1% for the year and trades with a forward price-to-earnings ratio of more than 23.

The report was of course hailed as a signal of American greatness – the biggest comeback in history, according to Donald Trump – and the White House even suggested it meant less support may be needed for the economy: ‘There’s no reason to have a major spending bill. The sense of urgent crisis is very greatly dissipated by the report,’ said the president’s economic advisor Stephen Moore.

Cue the Federal Reserve this week which needs to keep up the ‘whatever it takes’ mantra – does it see concern in the recent rise in Treasury yields that it needs to lean on, or will it take their recovery as a sign of optimism?

NFP boosts stocks, but recovery will still take a long time

I would like to make three points on this jobs report.

One, an unemployment rate of 13.3% is still very, very bad – 18m jobs lost over two months and a continuing weekly claims count on the rise.

Two, this was the easy bit as furloughed workers came back to their jobs as soon as they could – this seemed to happen a little quicker than had been expected but was, in itself, not the surprise. The tough part is not the immediate snap back in activity once restrictions lift, but recovery to 2019 levels of employment and productivity, which will take much, much longer.

Three, the data itself is flawed. There have been classification errors, so the real rate of unemployment may be much higher, whilst the response rate to the survey was a lot lower than usual.

Treasury yields and stocks surged – the S&P 500 went above 3200 before closing at 3193, whilst 10-year yields drove to 0.94%. Gold pulled back to its weakest level in a month.

China trade data, German industry output weigh on European stock markets

European stock markets opened lower on Monday, pulling back marginally from Friday’s peaks as Chinese trade data and German industrial production numbers weighed. China’s exports fell 3.3% year-on-year in May, whilst imports declined 16.7%.

German industrial plunged 18% last month, the biggest-ever decline.  But there is little sign risk appetite has really slackened. The FTSE 100 looks well supported now above 6400, having closed the all-important March 6th-9th gap. The DAX looks well supported at 12,700.

Crude oil gaps higher after OPEC meeting

Crude prices gapped higher at the open after OPEC+ agreed to extend the deepest level of production cuts by another month and Saudi Arabia followed this by hiking its July official selling prices by around $6, more than had been expected.

A deal among OPEC and allies, confirmed on Saturday, had already been all but announced last week. WTI (Aug) pushed up above $40 but gains have been capped with this agreement being all but fully priced.

The question will be whether there is appetite among members to extend cuts again. Those countries that have not complied with quotas in May and June will need to make up the difference in July, August and September.

Higher oil prices will encourage US shale producers to reopen taps, whilst it is unclear how well demand is coming back despite lockdown restrictions being lifted around the world.

Equities head for strong finish, all eyes on the bond market, NFP jobs report

No V? The lack of a V-shaped recovery may not be worrying stock markets too much, but it is a source concern for consumers who lost confidence over the course of May. Perhaps this was due to the glacial pace of easing of lockdown restrictions and annoyance at the government; or perhaps it was economic – worries about job losses and a big drop in house prices finally sinking in and offsetting the novelty of being furloughed.

Whatever the cause, GfK’s UK consumer confidence index slipped to –36 in the second half of May, down from –34 in the first half and near the –39 printed in July 2008. Meanwhile, Japanese household spending fell even further in April, declining more than 11%. This was the fastest drop in spending since 2001 and built on a 6% drop in March.

Stock markets fell yesterday, pausing what’s been a robust risk-on rally in June, whilst bond yields snapped out of their funk. European stock markets suffered a broad decline. The Nasdaq hit a record intra-day high but ended down 0.7% on the day. The Dow eked a small gain, but the broad S&P 500 index declined 0.34%, though held the 3100 handle after dropping as low as 3090.

European stock markets rebound, eyes on bonds after ECB QE hike

Today, European stock markets rallied back to their highs of the week in the first half hour of trading, with the FTSE rising above 6400 and the DAX at 12,700. Both set to complete a very strong week of gains, with a German stimulus package and ECB bond buying helping to lift sentiment. The DAX’s breach of the 61.8% retracement was a very good bullish signal –  since then, in the last week it has cleared the 200-day line and advanced through the 78.6% level, up close to 10% since last Friday’s close. The FTSE is over 5% higher this week.

Eyes on the bond market again: after being somewhat subdued by central bank actions for many weeks US 10yr yields broke out to 0.85% even as stocks slipped up, whilst 2s couldn’t move beyond 0.2%. I think you have to look deeper into what the central banks are doing here as well as the amount of issuance. The Fed is reducing the pace of asset purchases, but investors think it will need to keep a lid on the front end of the curve for a long time by keeping its target rate at zero.

The move in US yields seemed to be a result of the ECB move to increase QE by a further €600bn. I’m not sure we can draw any immediate conclusions from this sharp move in US rates, but it will be very interesting to watch how the Fed responds to this development. Does it seek to influence the yield curve – yield curve control like the Bank of Japan, or does it let bond markets function?

If investors are dumping longer-dated bonds, and driving up yields, it may be that the inflation trade is on – given the tsunami of issuance and central bank intervention, it is logical enough to expect a bout of inflation coming round the bend, even if the immediate pressures from the pandemic are deflationary. Or it may just be a signal that the bond market thinks the worst of the crisis is over and we can chill out a bit – the move up in yields and drop in the Vix under 25, combined with the rally in equities should all be telling us that things are hunky dory.

When you look at the economic data, however, it’s hard to be to very optimistic. One to watch.

US nonfarm payrolls report on tap

The US nonfarm payrolls print is the last big risk event of the week, and seen at –8m, albeit Wednesday’s ADP number was just –2.76m vs –9m expected. Last month showed a massive –20m drop, but it only really told us what we already knew after several weeks of dreadful weekly initial claims numbers. Yesterday, US initial jobless claims fell to 1.9m but the continuing claims number rose 650k from last week to 21.5, ahead of expectations.

The fact that this number is rising is a worry that either businesses are not rehiring very fast, or worse, workers laid off simply don’t want to go back to work because they earn more now being unemployed thanks to the expanded benefit package. One report indicated about 40% of US workers are better off not working.

WTI oil, Brent oil near highs as OPEC again suggests moving meeting

Oil was near the highs with WTI (Aug) above $38 and Brent (Aug) above $40.50 as OPEC brings its off-again, on-again meeting forward from June 9th to June 6th (tomorrow) – at least that is the current understanding.

At various stages this week it’s been taking place yesterday, next week and not at all. Russia and Saudi Arabia want to get this extension over the line before the start of the new trading week. The meeting taking place on a Saturday does raise the prospect of a gap open on Sunday night.

Dollar unwind continues, euro higher on ECB stimulus

In FX, the dollar continues to get hit in an unwind of the pandemic trade that pushed it aggressively higher. EURUSD has advanced with the ECB stimulus which is going to give the politicians a better chance of agreeing to fiscal stimulus as per the EC’s budget proposals.

EURUSD broke above 1.1350 to trade around 1.1370 – eyes on the 1.1450 target still. GBPUSD is up around 1.2640, near to breaching the 200-day moving average, despite worries about Brexit talks going nowhere and the British parliament rejecting any extension of the transition period. The break by the pound above the twin peaks of the April highs opens up the path back to 1.28 and then 1.31, but the 200-day line offers a big test first.

Candlestick price chart for the pound sterling to US dollar FX pair

European markets tumble in catchup trade, Trump bashes China

On the plus side, the UK is sketching out how it plans to end the lockdown. On the minus side, it’s going to take a long time to get back to normal. This, in a nutshell, is the problem facing the global economy and it is one reason why equity markets are not finding a straight line back to where they were pre-crisis.

Indices on mainland Europe are catching up with the losses sustained in London and New York today, having been shut Friday. The DAX retreated 3% on the open to take a look again at 10,500, whilst the FTSE 100 extended losses to trade about 20 points lower. Hong Kong turned sharply lower ahead of its GDP report.

Whilst monetary and fiscal stimulus sustained a strong rally through April – the best monthly gain for Wall Street since 1987 – it’s harder to see how it can continue to spur gains for equity markets. Moreover, US-China tensions are resurfacing as a result of the outbreak, which is weighing on sentiment. Donald Trump spoke of a ‘very conclusive’ report on China – the demand for reparations will grow, and trade will suffer as the easiest policy lever for the White House to pull. This is an election year so I’d expect Trump to beat on the Chinese as hard as he can without actually going to war. Trade Wars 2.0 will be worse than the original.

And as I pointed out in yesterday’s note, equity indices are showing signs of a potential reversal with the gravestone doji formations on the weekly candle charts looking ominous.

Warren Buffet doesn’t see anything worth investing in. Berkshire Hathaway has $137bn in cash but the Oracle of Omaha hasn’t found anything attractive, he said on Sunday’s shareholder meeting. His advice: buy an index fund and stop paying for advice.

In FX, today’s slate is rather bare but there are some European manufacturing PMIs likely to print at the low end. The US dollar is finding bid as risk appetite weakens, favouring further downside for major peers. EURUSD retreated further having bounced off the 100-day SMA just above 1.10 to find support around 1.09250. GBPUSD has further pulled away from 1.25 to 1.2460.

Front month WTI retreated further away from $20. CFTC figures show speculative long trades in WTI jumped 35% – the worry is traders are trying to pick this market and the physical market is still not able to catch up with the speculators. The move in speculative positioning and price action raises concerns about volatility in the front month contract heading into the rest of May.

BT Group shares dropped more than 3% on reports it’s looking to cut its dividend this week. Quite frankly they ought to have cut it months ago. I rehash what I said in January: Newish CEO Philip Jansen should have done a kitchen sink job and cut the dividend from the start. The cost of investment in 5G and fibre is crippling, despite the cutbacks and cost savings. Net debt ballooned to more than £18.2bn – up £7.2bn from March 31st 2019. How can BT justify paying over £1bn in dividends when it needs to sort this debt out, get a grip on the pension deficit and do the kind of capex needed for 5G and mass fibre rollout? Given the current environment, a dividend cut seems assured.

What to watch this week

NFP – Friday’s nonfarm payrolls release is likely to be a history-making event. Last month’s -701k didn’t reflect many days of lockdown, so the coming month’s print will be seismic. However, this is backward looking data – we know that in the last initial jobless claims have totalled around 30m in six weeks – the NFP number could be as high as 22m according to forecasts. The unemployment rate will soar to 16-17%. The main focus remains on exiting lockdown and finding a cure.

BOE – The Bank of England may well choose this meeting to expand its QE programme by another £200bn, but equally it may choose to sit it out and simply say that it stands ready to do more etc. The Bank will update forecasts in the latest Monetary Policy Report, with the main focus likely to be on how bad they think Q2 will be. Estimates vary, but NIESR said Thursday the contraction will be 15-25%.

RBA – The Australian dollar is our best risk proxy right now. The collapse in AUDJPY on Thursday back to 68.5 after it failed to break 70 was a proxy for equity market sentiment. We will wait to see whether the Reserve Bank of Australia meeting on Tuesday gives any fresh direction to AUD, however there is not going to be a change in policy.

The pound tumbles; Carney trade wars warnings; Lagarde to lead ECB and better than expected NFP

With Brexit unknowns continuing to rumble away, it’s been a tough few months for sterling. The weakening pound hit a six-month low against the dollar today, which was buoyed by better than predicted US jobs report.

The figures come hot on the heels of Mark Carney’s speech on Tuesday in which he warned that trade tensions and Brexit uncertainty had the potential to “shipwreck” the global economy.

“Business confidence has fallen across the G7 to its lowest level in five years, with sentiment among manufacturers particularly weak. Households have also become gloomier about the general economic outlook, though they remain relatively upbeat about their own financial situation, likely reflecting robust labour markets. This is a similar pattern to that which emerged in the UK following the referendum,” he said.

He warned that policymakers were underestimating the impact of the ongoing US trade wars with China, Mexico and Europe. In his speech, he said trade tensions had significant downside risks for the UK economy, given it is already struggling under the Brexit quagmire. But he added that the global uncertainty has caused a “sharp slowdown” in global trade, manufacturing, production and capital good orders.

His comments caused gilts to rally and led to speculation of a BoE rate cute later this year, despite his claims that global markets are already pricing in more stimulus than is necessary.

Carney’s warning, alongside the weakening pound and sluggish growth in the first and second quarters, suggest that the BoE forecast for the UK economy next month could be grim reading.

Sterling lost more than 1% over the week against the dollar, and is heading for its ninth consecutive week of losses against the Euro. With little good news on the horizon, the outlook for the currency is bleak.

Lagarde new ECB president

Carney’s name just keeps popping up in the news this week, as he’s one of the contenders tipped to replace Christine Lagarde as the head of the IMF.

Mario Draghi steps down in October and Lagarde has been nominated to replace him. The nomination has surprised many, as Lagarde would be the first ECB president without any experience of setting central bank policy. She would also be the first female president of the ECB.

It’s a tough time to take over the ECB presidency, with pressure to improve growth across the Eurozone and – crucially – keep the area intact. It’s tough not to keep coming back to Brexit, but the UK’s disorganised and divisive split from the EU has done nothing to reduce calls for similar EU-exits from member states.

However, Lagarde is clearly no stranger to a challenging role, taking over as head of the IMF in 2011 when many countries were still struggling to overcome the effects of the financial crisis.

Investors must feel that she is a safe pair of hands, as the impact of the announcement on the markets was instant. The FTSE 100 closed up 0.7% at 7,609 points on the day the news broke, while the New York S&P 500 hit a record high as it moved closer to the 3,000 mark. There was almost palpable relief that a monetary hawk, such as Jens Weidmann from Germany, has not been handed the reins.

Non-Farm Payroll better than expected

Finally, the US got a boost in what is already a celebration week with better than expected Non Farm Payroll figures.

It showed that 224,000 jobs were created in June, many more than the 160,000 that economists had forecast. The figures are a rebound from the disappointing figures in May, and will be a relief to many worried about the economic outlook.

The Greenback strengthened on the (already weakening) pound following the figures, and EUR/USD is falling toward 1.1200 – the lowest in two weeks.

However, despite the impact on the dollar, investors would be wise to be cautious. Wage growth was disappointing compared to expectations and trade wars continue to cause tensions in global markets. Nevertheless, concerns of a recession may be over-egging it.

As Rewan Tremethick explains here, these figures have come just at the right time and show that the gap between market expectations, and what the economy actually needs, could be shrinking – just.

CySEC (أوروبا)

  • يتم حفظ أموال العملاء في حسابات مصرفية منفصلة
  • تعويضات صندوق تعويضات المستثمر FSCS تصل إلى 20000 جنيه إسترليني
  • تغطية تأمينية بقيمة 1000000 يورو**
  • حماية الرصيد السلبي

المنتجات

  • CFD
  • تعاملات الأسهم
  • Quantranks

Markets.com، التي تتولى تشغيلها شركة Safecap للاستثمارات المحدودة ("Safecap”) مرخصة من قبل مفوضية قبرص للسندات والتداول (CySec) بموجب الترخيص رقم 092/08 ومن قبل هيئة سلوكيات القطاع المالي ("FSCA") بموجب الترخيص رقم 43906.

FSC (العالمية)

  • يتم حفظ أموال العملاء في حسابات مصرفية منفصلة
  • التحقق الإلكتروني
  • حماية الرصيد السلبي
  • تغطية تأمينية بقيمة 1000000 $**

المنتجات

  • CFD

Markets.com، التي تتولى تشغيلها Finalto (جزر العذراء البريطانية) ذ.م.م. المحدودة ("Finalto BVI”) مرخصة من قبل لجنة الخدمات المالية في جزر العذراء البريطانية ("FSC") بموجب الترخيص رقم SIBA/L/14/1067.

FCA (المملكة المتحدة)

  • يتم حفظ أموال العملاء في حسابات مصرفية منفصلة
  • تعويضات صندوق تعويضات الخدمات المالية تصل إلى 85000 جنيه إسترليني *بحسب المعايير والأهلية
  • تغطية تأمينية بقيمة 1000000 £**
  • حماية الرصيد السلبي

المنتجات

  • CFD
  • المراهنة على الهامش

Markets.com، التي تتولى تشغيلها Finalto Trading Limited مرخصة من قبل هيئة السلوك المالي ("FCA") بموجب الترخيص رقم 607305.

ASIC (أستراليا)

  • يتم حفظ أموال العملاء في حسابات مصرفية منفصلة
  • التحقق الإلكتروني
  • حماية الرصيد السلبي
  • تغطية تأمينية بقيمة 1000000$**

المنتجات

  • CFD

Markets.com، التي تتولى تشغيلها Finalto (Australia) Pty Limited تحمل ترخيص هيئة الخدمات المالية الأسترالية رقم 424008، وهي مرخصة لتقديم الخدمات المالية من قبل هيئة الأوراق المالية والاستثمار الأسترالية ("ASIC”).

سيؤدي تحديد إحدى هذه الجهات التنظيمية إلى عرض المعلومات المتوافقة على نطاق الموقع الإلكتروني بأكمله. إذا أردت عرض معلومات عن جهة تنظيمية أخرى، الرجاء تحديدها. لمزيد من المعلومات، انقر هنا.

**تنطبق الأحكام والشروط. شاهد السياسة الكاملة لمزيد من المعلومات.

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