Jobs data is hawkish overall

The US non-farm payrolls number missed the market estimate, but the upward revision to the July report and the dip in unemployment added to speculation that rates will rise this month.

Banners at a jobs fair
Source: Bloomberg

The August report showed that 173,000 jobs were added compared with the estimates of 217,000. The July report was revised from 215,000 to 245,000, and the unemployment rate dropped from 5.3% to 5.1%; dealers were only anticipating a drop to 5.2%.

The market reacted the same way it always does; traders saw the headline figure and assumed a more dovish stance, but after closer inspection realised it strengthened the hawk’s argument. Let’s be clear, the numbers were not so great that a rate rise this month is a certainty, but it has made traders less certain of the rate change in the near future.

The US dollar is marginally higher after the announcement, and now that US unemployment is a whisker away from full employment (which is 5%) additional gains are on the cards.

Stock markets jumped initially, and then the realisation of positive jobs data kicked in, and they are now firmly lower. Gold, like stocks, jumped for joy at the slight of the headline figure, but now the yellow metal has given up its gains and is heading south. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.