U.S. nonprofit salaries count hugely
Friday’s nonprofit payrolls came as a huge surprise, offering a huge deficit to the negative side, as the US economy added only 235,000 jobs. Despite a significant 133,000 revisions last month, there was no compensation for the shock of missing data in the headline data. Household employment was strong, helping to reduce the employment rate to 5.20%, but retail sales fell. At the same time, government construction rose only slightly, with business services and transportation saving the title.
The sweeping of the Delta variant across the United States has clearly affected the demand for travel and leisure, and perhaps many Americans have refrained from returning to the workforce. This contradicts various job vacancy surveys, which clearly show that employers are screaming for work and that the average hourly wage, which was also published on Friday, rose higher than expected, by 0.60%.
I will not postulate the reasons for the stubbornly low employment growth in an environment where employers have millions of vacancies. There are many armchair experts in the world for this. Needless to say, total employment in the United States is still more than 5.0 million lower than before the pandemic, and all the thoughts that the FOMC is lowering at this month’s meeting are now behind the table. Add last week’s soft Chinese data, which usually runs a few months ahead of the US and the hawks are receding.
I would have expected on Friday to “buy everything” from the US dollar craze. Instead, we just got a whine. The US dollar rose, but not significantly, gold rose, but not much, crypts rose because they are crypts, and Wall Street shares somehow fell aside. Banks fell as US yields eased, so it makes sense for them to earn more money as interest rates rise and the yield curve rises positively. This whining may be due to the Wizards of Wall Street heading to the exit door immediately after the long weekend numbers. Today, the US and Canadian markets are closed for campaign day (sorry, campaign day in rebellious English). So there may be a more real reaction tomorrow.
Asia is cautiously open this morning, only the Japanese FOMO elves are excited, raising the Nikkei 225 higher as Friday’s Suga rush continues. After a softer heavyweight China and the US last week and a day-to-day downfall on the continent, regional investors are hesitant to seize the US non-farming peace dividend, which has virtually loosened all central banks in the Asia-Pacific. Waiting for the elves of Wall Street to return from the last long weekend of the summer is probably not a bad strategy.
This week includes some difficult central bank policy decisions, but not much on tier one data worldwide. US JOLTS job postings should show that employers are screaming for a warm body, while tomorrow’s Chinese trade data is the highlight of Asia. However, Asian investors are likely to be more concerned about who follows some “shared welfare” love. A soft export number could cause a negative quake in Asia, although it raises expectations that central government incentives are on the way. For Chinese stocks, you can cut down / rise in both ways.
The Reserve Bank of Australia will announce its latest political decision tomorrow. Prices remain the same at 0.10%, but interest is focused on whether it abandons its narrowing plans. That would be positive for Australian equities, which are under a former dividend hammer today.
Negara Malaysia will also leave interest rates unchanged at 1.75%, with the intention of supporting the recovery of Covid-19 already clearly telegraphed. If the Fed drops to the table at least until the end of the year, the ring may continue as a potential carrier trade candidate.
The highlight of the week is the political decision of the European Central Bank. Eternal lower interest rates will not change, but recent inflation data in the euro area has made bulls in Northern Europe scream loudly and hunt pigeons. Noise has narrowed, but I believe that the ECB will take note of the non-agricultural payroll data from China, the Asian PMI and the United States, and this time it will cut off the wings of hawks. However, this should not derail the euro rally, which is just as weak as the US dollar.
U.S. nonprofit data has profoundly derailed my Fed’s fourth-quarter tantrum, the Asian Central Bank’s nightmare, and the poor performance of ASEAN. I think about that in the coming days, especially when the United States is back at work.
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