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Market Commentary

Global stocks head for worst week since mid-February

  • Futures extend losses after jobs miss
  • US Treasury yields extend losses after big jobs reportmiss
  • Europe trades lower ahead of US jobs data
  • Asia markets mostly lower; ASX erases losses after RBA cuts inflation view
  • Dollar cedes ground before US jobs report
  • Gold edges above $1,280 ahead of US jobs data
  • Oil pares losses slightly after jobs report; crude down onprofit-taking
    Traders Dump’n’Pump VIX, Buy Gold After Dismal Jobs Data –
    S&P Gives Up Gains Year-To-Date

Stock markets in Europe and Asia struggled on Friday, with only monthly U.S. non-farm payrolls numbers standing in the way of shares globally racking up their biggest weekly fall since mid-February.

Concerns over growth, the failure of extraordinary central bank stimulus and banking profitability in an era of negative interest rates, allied to a still tepid recovery in oil prices CLc1, has kept a lid on any optimism over the past month.

The only indicator that until recently “confirmed” a “strong recovery”, non-farm payrolls, just had a major stumble.

In yet another Goldman jinx which just two days ago boosted its payrolls forecast from 225K to 240K, moments ago the BLS reported that ADP’s ominous print was right when it said that April payrolls rose only 160K, far below the 200K expected, and higher than just 1 of 92 economist expectations. This was the lowest print since last September’s 145K.

Worse, the household survey suggested that a whopping 316K jobs were lost in April, as the total number of employed dropped from 151,320 to 151,004.

The silver lining was that unlike last month, wage growth was more stable on both an average hourly and weekly basis, with average hourly earnings rising 0.3%, as expected, and up from a downward revised 0.2% in March. Curiously, last month’s big drop in average weekly earnings was revised higher to 2.1%, while in April weekly earnings rose 2.6%, the highest since last October.

“The labor market has been a shining beacon compared with other elements of the U.S. economy for the past few months, but no longer,” said Dennis de Jong, managing director of London based broker UFX.com.

“Today’s figure has come in disappointingly low.”

According to the BLS, total nonfarm payroll employment increased by 160,000 in April. Over the prior  12 months, employment growth had averaged 232,000 per month. In April, employment gains occurred in professional and business services, health care,  and financial activities, while mining continued to lose jobs.

June Rate Hike Odds Collapse To Record Lows – Market Prices In No Hikes Through Feb 2017

The market took one look at today’s dismal jobs data and marked down the data-dependent Fed’s rate-hike schedule to record lows. June odds are now at 4% – the lowest on record…

The yield on the benchmark 10-year Treasury note, which moves inversely to its price, sat lower at 1.707 percent. The yield on the 30-year Treasury bond was also lower, at 2.575 percent. Two-year yields, meanwhile, broke below 0.7 percent.

The jobs report sent most U.S. Treasury yields to nearly four-week lows.

Traders reckon the report indicates an economy that may be losing some steam.

“By adding to signs that economic weakness is lingering into the second quarter, these disappointing numbers greatly reduce the likelihood of the Fed hiking rates this side of the Presidential election,” said Chris Williamson, chief economist at Markit.

S&P Gives Up Gains Year-To-Date

 

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