NFP report : Another danger signal for the US economy
Head of Macro Analysis
Summary: The latest ADP, which rose only 27k, was the first very worrying signal regarding the US labour market this year. The payrolls for May that have just been released tend to confirm that the jobs market is indeed facing negative pressure.
Usually, when we are approaching the end of the cycle, we should not focus so much on the unemployment data as they are both lagging and contrarian indicators. However, this big miss will obviously reinforce the market view in favor of rate cuts (odds are above 70% for July Federal Open Market Committee meeting).
The Fed is in a corner, as economic activity is showing signs of weakness and it is pushed to move towards “insurance cut”. Nonetheless, such a move will be interpreted by market participants as panic cut, meaning they will expect more cuts to come as the outlook is getting gloomier.
We are heading towards a global policy reversal, with high expectations that the Fed will cut rates by 50 basis points by October.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.