NFP offers no reason to delay rate hike

The US added 235k jobs to the economy in the past month, with the latest non-farm payrolls report indicating continued strength in the labour market. As well as the headline reading beating the consensus forecast there was also an upwards revision to the prior print in a report that contains very little by the way of weakness. Average earnings ticked higher whilst the unemployment rate fell back to 4.7%. Expectations for a rate hike from the Fed next week were already high heading into this afternoon’s release, and given the strong nature of the report, a third increase in the hiking cycle now looks like a foregone conclusion at next Wednesday’s announcement. Donald Trump was clearly impressed with the release, with the US president retweeting a post on the data shortly after it was announced.  

Records continue to tumble for US stocks

Despite not managing to post a fresh all-time high so far this week, US stock markets continue to break records. The market has now gone eight years since recording its post-financial crisis low in early March 2009 and this week has also seen both the S&P500 and Dow extend their streak of avoiding a 1% decline. It is now 102 trading sessions since these indices experienced a drop greater than 1%, which marks the longest winning run since December 1995 for the S&P500 and September 1993 for the Dow.

Oil set to end the week bad week near its lows

The price of crude has tumbled this week after Wednesday’s DOE report showed a far bigger build than expected in US stockpiles. Brent Oil is set for its lowest weekly closing level since OPEC announced that it had agreed upon a cut in its output in late November. The benchmark has declined by approximately 7% in the past few sessions and by breaking below a fairly major technical level, there is some suggestion that further declines are in store.

Euro rising on hawkish ECB hints

Yesterday’s ECB rate decision was a fairly placid affair for the markets compared to previous events with the moves not as sharp and severe as they often can be. Now the dust has settled however there does appear to be a steady bid in the Euro with the single currency moving up to its highest level against the pound this afternoon in almost two months. When the decision to extend the current QE program, albeit at a reduced pace of purchases, was announced in December, Mario Draghi was at pains to stress during his press conference that the move didn’t constitute a tapering off of the ECB’s monetary stimulus. The Italian adopted a slightly more hawkish tone yesterday and whilst the current easing doesn’t technically constitute a taper, there is a growing feeling in the markets the central bank are edging closer to the normalization of their monetary policy. This has seen yields on German government debt rise and proved supportive of the Euro.