Blowout NFP makes lasting impact on stocks, USD and Gold

Summary:

• All round solid NFP ends weak data narrative

• US500 surges back near all-time highs

• USD marches higher while Gold falls

• Oil gains after OPEC+ agrees deeper cuts

• Crypto newsletter: Fed-backed Crypto not needed?

It’s been a pretty volatile week for US stock markets, with equities taking a hit on some trade concerns and soft data in the first couple of sessions, but the recent release of an all round stellar jobs report from the world’s largest economy has boosted sentiment and pushed indices higher. 

• NFP employment change: +266k vs +180k exp. Prior: 156k (revised up by 28k)

• Unemployment rate: 3.5% vs 3.6% exp. 3.6% prior

• Average hourly earnings M/M: +0.2% vs +0.3% exp

• Average hourly earnings Y/Y: +3.1% vs +3.0% exp

Looking at the jobs data itself it’s not only hard to find any weakness but hard to find anything that isn’t strong with a large beat on the headline, upwards revision to the October data, and unemployment rate falling back to its lowest level in several decades. If you want to nit-pick you could say the M/M wage growth was a tad lower than expected, but this is more than offset by a better than forecast Y/Y reading and overall there’s little disputing the strength of this release. The US500 has rallied by over 20 points on the day and is back trading within striking distance of its all-time high around 3150. 

The impact has not been confined just to the equity space with US yields and the US dollar surging higher and Gold swooning. The EURUSD has broken below prior support around 1.1065 while Gold trades in the low $1460s at the time of writing. 

Various media outlets spread the information about an agreement among OPEC+ to cut output target by additional 500kbd. This was sought by the Saudis in a hope to secure higher price in Aramco sale. First such rumours emerged on Wednesday and the news of the decision doesn’t result in a major reaction. However, once the US entered there was a push higher with Oil.WTI coming close to the $60 a barrel mark on its daily high. 

Our latest Crypto newsletter looks at remarks from Mnuchin and Powell that they don’t see the need for a Fed-backed cryptocurrency and can be viewed in full here.