Morning Minutes

Strong US Nonfarm Payrolls Boosts US Dollar, Sinks Stocks




A stronger than expected US employment report has pushed the US 10-year treasury note yield back up above 3.0% this morning with investors apparently taking the news as a green light for the Fed and other central banks to continue raising interest rates in order to combat inflation.

Today’s North American employment numbers were mixed. US nonfarm payrolls growth beat expectations (372K vs street 268K and previous 384K) while employment in Canada surprisingly contracted (-43.2K vs street 22.5K and previous 39.8K).   Wage inflation continues to build with average hourly earnings in the US still above 5.0% (5.1% vs street 5.2%) and average hourly wages in Canada accelerating (5.5% vs previous 4.5%).  

US index futures have started to give back some of yesterday’s US index gains of 1.1% to 2.3% with Dow futures down 0.2% and NASDAQ futures down 1.0%. European market action is mixed today with the Dax up 0.9% and the FTSE down 0.5%. Yesterday’s rally in commodity prices has faded. Copper is down 1.9% while WTI crude oil is down 0.8% and natural gas is down 3.0%.  Losses in commodities have accelerated since the US employment report came out with rising treasury yields boosting the US Dollar. In currency action, the greenback is now up 0.4% against the Pound and the Loonie, up 0.3% against the Euro and the Yen, and up 1.6% against Bitcoin while Gold is holding its ground.

Heading into next week, stagflation remains in in the spotlight, but the focus may shift from the economy toward inflation with China reporting inflation numbers over the weekend and the US scheduled to report consumer and producer price inflation during the coming week.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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