Dismal Employment Numbers Increase Rate Cut Pressures

Employment numbers from both sides of the border were rough this morning, increasing pressure on both the Fed and the Bank of Canada to resume cutting interest rates.

While the US managed to eke out less than expected job growth (22K vs Street 75K), Canada saw steep and accelerating job losses for a second month in a row (-65.5K vs previous -40.8K).

On this news, US treasury yields are coming down with the 10-year falling toward 4.10%, its lowest level since April, and the 30-year yield which recently bumped up against 5.00%, has rolled back under 4.85%. This has the US Dollar in retreat today, enabling the Euro, Yen, Aussie and Pound to gain 0.6%-0.8%. Gold is holding steady near $3,600/oz. The Loonie is lagging with only a 0.10% gain due to weakness in Canadian employment.

US index futures are mixed on the news, which may be seen as potentially positive for interest rates but potentially negative for future corporate earnings. Dow Futures are down 0.3%, S&P futures are up 0.2% and NASDAQ futures are up 0.6%. In Europe today, the DAX is up 0.1% and the FTSE is up 0.2%. Asia Pacific trading saw the Nikkei gain 1.0% and the Hang Seng gain 1.4%.

Broadcom* is up 12.8% in premarket action this morning after the chipmaker beat the Street on sales and earnings and provided positive guidance. On the other hand, lululemon is down 19.5% premarket after its guidance came in below expectations.

*Shares of Broadcom are held in some portfolios managed by SIA Wealth Management. 

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