Non farm payrolls showed US jobs growth slowing and unemployment hit a 21-month low with 594,000 people entering the job market indicating a tightening labour market. This implies the Fed’s tapering and rate rises next year remain on the cards. However, the drop in yields that followed Friday’s numbers shows the market is concerned with growth potentially looking weak the Fed shouldn’t rush to raise.
The Omicron variant is still causing fears and uncertainty as the scientists determine its relative threat and markets dislike uncertainty.
The drop in yields drove oil and gold higher – the move in oil came at the end of a week that had seen declines based on strategic reserve release and also OPEC+ adding supply on the back of COVID dampening demand – the resurgence of omicron variant has made the market, and OPEC+ reassess the production increases although they haven’t as yet been rolled back.
In metals aluminium and copper initially fell on growth fears but aluminium found its feet and recovered on supply issues which have dogged the metal all year.
The US$ remained supported particularly against the AUD and GBP both of which having expectations of rate rises are starting to see the market reappraise again on the back of low growth. Additionally, the USD has seen speculators reducing the net long US$ positions again as a result of decent profits and year end looming.
Figures this week are medium in expected market impact but Michigan consumer confidence is important at the end of the week to see the reaction of consumers to the new variant and general resilience of the US economy.
The deciding factor may be the scientists and their take on omicrons transmissibility, resistance to vaccine and symptoms.
Date | Country | Figures | Expected | Previous |
Dec 06 | EUR | GDP YoY | 3.7% | 3.7% |
| USA | Trade Balance | -67.5B | -80.9B |
Dec 09 | China | CPI YoY | 2.5% | 1.5% |
| USA | Initial Jobless Claims | 228K | 222K |
Dec 10 | GBP | Industrial Production YoY | 2.2% | 2.9% |
| EUR | CPI YoY | 6% | 6% |
| USA | CPI YoY | 4.9% | 4.6% |
| USA | Michigan Cons Sentiment | 67 | 67.4 |
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