Daily summary: Faster Fed taper in sight despite mixed NFP report

7:22 PM December 3, 2021
  • Wall Street under pressure, US100 lowest since September
  • Mixed US payrolls data
  • Canada jobless rate at new pandemic low 

Today's data from the US labor market certainly did not turn out to be as good as expected by some market participants, especially the Fed. The US economy recorded its smallest job gains this year - 210k compared to analysts’ estimates of 550k, although the unemployment rate eased more than expected to 4.2%, while the labor force participation rate ticked up to 61.8%. Despite the disappointing job growth, there does not appear to be any major shift in the labor market, particularly taking into consideration the current unemployment rate.

Also ISM Non-Manufacturing PMI for the US jumped to 69.1 in November 2021 from 66.7 in the previous month, easily beating market expectations of 65 and indicating the fastest pace of expansion in the services sector since the series began in 1997. Both business activity and new orders rose at record rates, while the pace of job creation quickened sharply. Meanwhile, supply chain issues continued to challenge output growth and prices paid by services industries remained high.

The set of today’s data indicates that the acceleration of the tapping process is almost certain. Bullard confirms such conjecture, and in fact only the large spread of Omicron and its significant impact on economic activity could lead to a change in the current Fed trajectory. Therefore, in mid-December we should expect an acceleration of the tapering.

However, not everyone liked the data. Technology sector took a hit and Nasdaq fell more than 2.5% today, mainly due to giants such as Apple and Tesla.

Due to faster changes in the Fed's monetary policy, the dollar was gaining and, interestingly, the gold also moved higher. Meanwhile, a strong dollar put pressure on oil prices.

It is worth mentioning the excellent data from the labor market in Canada. The Canadian economy added a net 153.7k jobs in November, far above market expectations of 35k, pointing to the sixth consecutive month of expansion in the workforce. The unemployment rate fell to a new pandemic-low of 6.0% in November from 6.7% in September, below market expectations of 6.6% and within 0.3 percentage points from the jobless rate recorded in February of 2020.

SILVER price fell sharply this week, however buyers managed to halt declines around major support at $22.00, which is marked with lower limit of the 1:1 structure. As long as the price sits above this level, further upward move is possible. Source: xStation5

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