‘Welcomed’ weakness

Yesterday’s weak US jobs data echoed positively across US government bonds and somehow neutralized the negative mood across technology stocks.

The US economy added 57,000 new nonfarm jobs in June, the past two months’ readings were revised lower, wage growth came in line with expectations (0.3% m-o-m and 3.5% y-o-y), while the unemployment rate fell to 4.2%. But that was due to a decline in labour force participation.

Overall, the data looked soft enough to encourage the market to trim Federal Reserve (Fed) rate hike expectations for this year. The market still expects the Fed to hike once this year—with a little more than a 50% chance of that happening as early as September. The US 2-year yield is softer but holding above the 4.10% mark, as US crude rebounds slightly from yesterday’s dip to $67pb but remains calm near the $70pb level, with no major headlines on the peace negotiations front. There is more news about increasing oversupply in key markets, and tens of millions of barrels of Iranian oil sailing without a preset destination, than worries about supply shortages.