It was always going to take a major disappointment in today’s non-farm payrolls to even hint at the Fed swerving away from a December rate increase. Today’s 211,000 number, just ahead of the 200K forecast, does not fall into that category. Indeed, it leaves the general perception of an imminent rate increase unchanged, with the upward revision to the previous month’s figure perhaps even strengthening it. US indices have risen, as the market continues to feel more and more comfortable with an increase in rates.
In Europe, the picture is very different – Mario Draghi’s failure to live up to inflated expectations has left continental markets firmly on the back foot, with a rising euro doing its best to make life difficult for stock markets. As December progresses, we may see them move from anger to acceptance, but for now the continent is not the place for equity market bulls.
The week ahead has key numbers contained within it, most notably from China and the UK, but overall it is the relatively quiet period between the ECB and the Fed. US retail figures at the end of the week will likely go toward confirming a pending Fed move, but perversely this may continue to provide support to equities, as markets realise that there is life beyond a rate increase.