- Harry Bennett
- October 10, 2022
- 2:35 pm
- 10 min read
The U.S. Labour data revealed the country had added 263,000 jobs in September whilst unemployment dips to 3.5%!
Indices
Futures
Forex
– The U.S. jobs market shows signs of slowing despite adding 263,000 jobs last month. Septembers gain was much lower than the 420,000 average seen so far in 2022. It remains to be seen how long the jobs market can continue its current trajectory with fears lurking of an imminent recession.
– Equity markets remain mixed, the S&P 500 has bounced since hitting it’s lowest level since November 2020. U.S. Stocks dropped sharply on Friday as the Dow fell by more than 600pts. The tight labour market ruining all hopes of any potential Fed Rate cuts.
– Looking ahead, Consumer Price Index (CPI) figures are due out on Thursday, it is expected that headline CPI will moderate to 8.1% year on year. Core CPI data may accelerate to 6.5%, matching the March 2022 level which was a 40 year high.
– Gasoline prices have also surged higher on OPEC + production cuts (more details below).
– US Labour data – The addition of jobs for the U.S. market starts to slow down, 263,000 jobs were added in September whilst employment fell to 3.5%.
– The International Monetary Fund (IMF) managing director Kristalina Georgieva said it will lower its global economic growth forecast in the coming days. It is reported that the Chinese economy may grow by just 3% GDP this year. The second quarter economic growth fell to 0.4% (chart below) driven by a real estate slump, zero covid policy and disruptions by Russia’s invasion of Ukraine.
– The Agricultural bank of China will provide more than 300 billion yuan ($42 billion) in loans to support the country’s autumn harvest and planting. The focus is on grain production, storage facilities and cold chain logistics.
– Despite surpassing the UK as the fifth largest economy in the world, India’s prospective growth outlook has fallen to 5.7% in 2022 India’s central bank’s benchmark repo rate was raised by 50 basis points on Friday to 5.90%. This is an attempt to tame the above target retail inflation.
– In the UK, the Bank of England started buying back its bonds but far less than the minimum daily limit. The cut off date (14th October) is fast approaching so they are now doubling the size of its daily emergency auctions to buy long-dated govt bonds from £5bn to £10bn.
– European banks came under pressure last week as concerns mount around the health of large banking institutions Credit Suisse and Deutsche Bank.
– Crude Oil November’22 (CLX’22) surged 13.2% last week now trading around 92.00. After falling to its lowest point since the start of the year, the Russia / Ukraine tensions and OPEC cuts have moved the marked higher now trading between the 61.8% retrace and the 76.4% retrace of this years high/low (Chart below).
– Crude oil WTI November ’22 (CLX22) – Crude oil prices surge higher as OPEC confirms cuts, economists warn this is bad for the global economy.
Conclusion
The global macroeconomic outlook does not look very promising as global recessionary fears continue to mount. Inflationary data in the U.S continues to rise and China’s economic woes continue. The EU and UK will need to battle through their energy crisis’s this winter which is weighing on consumers overall purchasing power. Tightness in global supply chains shows a rotation away from equity markets and into the commodity sector as hedge funds maintain their net long positions. Swift reversals from the funds could lead to dramatic price movements.
Written by:
Harry Bennett
Copyright statement
No image or information display on this site may be reproduced, transmitted or copied (other than for the purposes of fair dealing, as defined in the Copyright Act 1968) without the express written permission of Earlam & Partners Ltd. Contravention is an infrigement of Copyright Act and its amendments and may be subject to legal action.
The risk of loss associated with futures and options trading can be substantial. Opinions set forth herein should not be viewed as an offer or solicitation to buy, sell or otherwise trade futures, options or securities. All opinions and information contained in this email constitute EAP’s judgment as of the date of this document and are subject to change without notice. EAP and their respective directors and employees may effect or have effected a transaction for their own account in the investments referred to in the material contained herein before or after the material is published to any customer of a Group Company or may give advice to customers which may differ from or be inconsistent with the information and opinions contained herein. While the information contained herein was obtained from sources believed to be reliable, no Group Company accepts any liability whatsoever for any loss arising from any inaccuracy herein or from any use of this document or its contents. This document may not be reproduced, distributed or published in electronic, paper or other form for any purpose without the prior written consent of EAP. This email has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. For the customers of EAP, this email is produced exclusively for our business and expert clients, it is not for general distribution and our services are not available to private clients. Past performance is not indicative of future results.