From Marc to Market:
Overview: The focus is on US employment today. Weak jobs growth and a tick up in the unemployment rate are expected to spur the Fed's first rate cut of the year in a couple of weeks. Position adjusting ahead of the report has weighed on the greenback broadly and overwhelmed the unexpectedly poor Germany factory orders and the data problem in UK that has exaggerated activity. Only a handful of emerging market currencies have not been lifted by the selling pressure on the greenback. These include the Turkish lira, Russian ruble, and Indian rupee.
Stocks and bonds are firm. All the large bourses in the Asia Pacific region rallied, led by the nearly 2.2% surge China's CSI 300. The Nikkei, the Hang Seng, and Taiwan's Taiex rose more than 1%. Europe's Stoxx 600 came into today practically flat on the week and is up about 0.2%. US index futures are trading with a firmer bias, as well. Gains in the S&P and Nasdaq will challenge the record highs. European benchmark 10-year yields are mostly softer and premiums over Germany have narrowed a little. The 10-year US yield a little lower, slipping through 4.16%. It is the lowest since May 1. Lower yields and a weaker dollar are helping support gold, which is hovering near $3350. It is around $100 higher on the week. October WTI is trading quietly in a half-dollar range above $63.
USD: The range the Dollar Index carved on August 22, the day Fed Chair Powell spoke at Jackson Hole remains operative. Only a convincing break of it is important from a technical perspective (~97.55-98.85). Everything else is churn. Today is about the jobs data. Sure, the Fed has two mandates full employment and price stability. Yet, it is clear that the deterioration of the labor market is the new new thing, not inflation being above target. Isn't this Powell meant [sic] when he suggested that the risk assessment may be changing? The July JOLTS on Wednesday showed that for the first time since April 2021, the number of unemployed outstripped job openings. Just as troubling was the decline in health care job openings in July to the lowest level in five years, and that sector accounted for around 40% of all new jobs in the past three years. Powell was also clear...
....MUCH MORE, he's just getting warmed up.
