- US July non-farm payrolls -23K vs +80K expected
- Canada July employment change +75.1K vs +15K expected
- Canada and the US discussing tariff relief deal
- Fed’s Barkin: We are in a zero-to-modest gain jobs environment
- New York Fed survey: One year inflation expectations dip to 3.6% from 3.7%
- Baker Hughes US weekly oil rig count: Unchanged at 588
- US official says there is progress on Iran-Oman on Strait of Hormuz
Markets:
- Gold up $106 to $4345
- US 10-year yields down 2.8 bps to 4.64%
- WTI crude oil down 42-cents to $76.87
- JPY leads, USD lags
- S&P 500 up 0.6%. Nasdaq up 1.3%
- S&P 500 up 3.5% on the week, best since April
The weak non-farm payrolls report put to bed some of the worries about an overheating US jobs market and sustained rise in inflation. Instead, we’re back to the low-hiring, low-firing paradigm that many Fed officials have highlighted over the past year. That’s an improvement in the inflation outlook and odds for a Sept hike are now below 50%. Of course, expect another swing after next week’s CPI report.
USD/JPY fell hardest after the data as Japan’s finance minister piled on with some intervention talk. The pair sank to 157.04 from 158.35 but there were dip buyers waiting and they walked it back to 157.99 before a second wave of selling left it near 157.50 late in the day.
The dollar was universally weak after the data, as you would expect. From worries about a surprise Fed hike a week ago, we’ve really changed the conversation and that’s going to keep Fed officials waiting and watching rather than advocating.
Naturally, stock markets like the lower yields and that extended a great week for US equities. The move had less drama than some of the recent choppy days and it was generally cruise control after the open, though not enough to challenge the record from earlier in the week.
Gold was a big winner once again on the dovish US shift. There also continues to be positive talk out of Hormuz but I don’t think anyone has truly bought into a long-term peace trade. Gold gained nearly 10% on the week and the GDX ETF had its second-best week ever.
The top S&P 500 performers on the day:
On the week, the winner was Coherent, which is a manufacturer of optical materials and semiconductors. The market is unsure about whether to buy the memory names on AI capex because capacity will come online in 2028 but is suddenly more confident about sustainable gains from Coherent, Lumentum and Corning.
This article was written by Adam Button at investinglive.com.