Morning Minutes

Yields Fall, Stocks Rally as Employment Numbers Come in Soft




US index futures have rallied following the release of today’s North American employment numbers. The three main contracts are currently up 0.3%-0.5% having traded close to flat overnight and this morning ahead of the news. European market action is mixed with the Dax up 0.15% and the FTSE down 0.15%.

US nonfarm payrolls (150K vs street 180K vs previous 336K), and Canada employment (17.5K vs street 22K vs previous 64K) both came in softer than expected, which the street appears to be taking as a sign that the Fed and other central banks may be done hiking interest rates. It may be too early to declare victory, however, as wage inflation numbers including US Average Hourly Earnings (4.1% vs street 4.0% and previous 4.3%) and Canada Average Hourly Wages (5.0% vs previous 5.3%) showed some improvement but remain a work in progress.

Treasury yields are sliding again with the US 10-year Treasury Note yield slipping back under 4.60%. The US Dollar is also backsliding, with the Loonie and Gold gaining 0.25%, while the Pound, Yen, and Euro have moved up 0.6%-0.7%. In commodity action, US Crude Oil is up 1.0% while Copper is holding steady.

Last night’s round of earnings reports was a bit soft with Apple ($1.46 vs street $1.39, down 1.5% premarket) beating on earnings but disappointing on guidance. Booking Holdings* also beat the street ($72.32 vs street $67.78), but shares are down 3.0% premarket after the company warned that the Israel-Hamas conflict is having a negative impact on travel demand.

US ISM Service PMI is due at 10:00 am EDT this morning (street 53.0 vs previous 53.6). Overnight Service PMI reports from Australia and the UK both came in just below 50 but were better than investors had expected.

*Shares of Booking Holdings are held in portfolios managed by SIA Wealth Management.

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Colin Cieszynski, Chief Market Strategist

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

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