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US Nonfarm Payrolls and Wage Inflation Exceed Expectations

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Please note that after today, the Morning Minutes are taking a summer break and will return on Tuesday August 31.

As is typical for a Friday in the summertime, world markets have been pretty quiet overnight and into this morning with investors sitting on their hands ahead of the North American employment reports.

Overseas, the DAX, FTSE and Hang Seng are all essentially flat today. Japan and Australia rose 0.3% overnight while Italy is up 0.8%. Commodities are also bouncing back today with WTI crude oil up 1.2% and copper up 1.0%.

US nonfarm payrolls for July have come even stronger than expected (943K vs street 870K) with the added bonus of June payrolls being revised upward (938K vs previous 850K). The unemployment rate also beat the street (5.4% vs street 5.7%). Wage inflation continues to build, however (4.0% vs street 3.8%).

The reaction in US index futures to this news, which may pave the way for the Fed to start talking about tapering stimulus at its Jackson Hole conference later this month, has been mixed. The US 10-year treasury note yield, which was trading below 1.20% earlier in the week, has climbed back up above 1.25% and has moved up toward 1.27% on the news. US index futures are mixed with Dow futures rising 0.2% and NASDAQ futures falling 0.4%.

Canadian job growth slowed more than expected in July (94K vs street 177K and previous 230K, while the unemployment rate improved but not as much as the street had hoped. (7.5% vs street 7.4% and previous 7.8%).

We’re pretty much at the end of earnings season for US large cap companies with the focus now clearly turning to small and mid-cap companies. Overnight results out of the US were somewhat disappointing with Beyond Meat reporting a worse than expected loss (-$0.31 vs street -$0.24). Video game producer Zynga is down 16.4% premarket despite beating the street on user growth and earnings as investors focused on softer than expected sales guidance for next quarter instead.

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

Colin Cieszynski, Chief Market Strategist
Market Commentary:

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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