US jobs beat economists’ forecasts, which lifts the S&P 500 to another new record high and douses market expectations for Fed rate cuts this year to 50 basis points. Australia’s trade surplus halves in May, and UK’s bond market goes on a wild ride.
In our deep dive interview, ANZ Chief Economist for Southeast Asia and India Sanjay Mathur assess how growing US deficits will see Asian investors diversify away from the world’s largest economy.
5 things to know in 5 minutes:
US jobs grew 147,000 in June, beating the 110,000 consensus. Stock investors celebrated, pushing the S&P 500 to a new high, but bond traders reduced their expectations for Fed rate cuts this year. ANZ Economist Bansi Madhavani says the underlying picture was weaker than the headline data.
Bansi says rate cuts by the Fed are still likely this year, although market expectations were pegged back around 16 basis points overnight.
Australia’s merchandise trade surplus halved in May to A$2.2 billion. Imports rose 3.8%, while exports fell 2.7% from April. ANZ Economist Sophia Angala says imports were dragged up by a large aircraft order, while LNG exports fell.
Traders are turning their attention to US trade news as the July 9 tariff pause approaches. ANZ Head of FX Research Mahjabeen Zaman says ongoing uncertainty will weigh on the US dollar.
British bond markets went on a wild ride in recent days as fiscal concerns triggered a rise in gilt yields. Prime Ministerial support for the Chancellor and the Government’s fiscal rules then calmed markets. Mahjabeen says a number of factors still weigh on the pound though.
Cheers,
Bernard.
PS: Catch you next week with a look ahead to rate decisions in both Australia and New Zealand.
